Big Fish, Small Bait: Suppliers Beware

In 20 seconds

Small businesses beware. Big company contracts often favour the buyer. Watch out for red flags like unfair IP ownership, exclusivity clauses, and unclear payment terms. To negotiate a fair agreement, research industry practices, seek expert advice, build relationships with the procurement team, and be prepared to walk away if needed. Protect your IP and business, even against what it can look like tempting offers. Don’t be afraid to stand up for your business’s worth.

In (just over) 2 minutes

At the heart of Barrett’s Selling Better philosophy is creating the conditions for a fair exchange of value and mutual prosperity between buyer and seller. However, we know that not all relationships are created equal which is why we want to tackle the important topic of supplier contracts.

For small consulting businesses, landing a contract with a big business or corporation can feel like striking gold. However, the initial allure of prestige and potential profit can quickly fade if the terms of the agreement are tilted heavily in favour of the larger entity. This is especially true when it comes to Intellectual Property (IP) ownership, where big businesses often seek clauses that grant them undue control over the consultant’s innovations and developments.

The old saying ‘Buyer Beware’ is also very true for suppliers.

So, before signing on the dotted line, small businesses must be wary of unfair procurement agreements and equip themselves with the knowledge and strategies to negotiate effectively. Here’s a critical guide:

Red Flags: Recognising Unfair Procurement Terms

• IP Ownership: Be cautious of clauses that grant the big business complete ownership of any IP generated during the project, even if it’s not directly related to the contracted work. This can stifle your future innovation and limit your ability to leverage your expertise elsewhere.
• Exclusivity: Beware of clauses that restrict you from working with other businesses in the same industry. This can significantly limit your market reach and financial potential.
• Payment Terms: Unreasonable payment terms, such as long payment cycles or performance-based payments with unclear or out-of-your-control metrics, can put a strain on your cash flow and create financial instability.

Negotiation Strategies for the Small Fish:

• Do Your Research: Before entering negotiations, thoroughly understand the big business’s standard procurement terms and industry practices. This knowledge empowers you to negotiate from a position of informed strength.
• Seek Expert Advice: Consider consulting with a lawyer specialising in intellectual property and contracts. Their expertise can be invaluable in understanding the legal implications of the agreement and negotiating favourable terms.
• Start Early and Negotiate Everything: Don’t be afraid to negotiate every aspect of the agreement, not just the big-ticket items like fees and deadlines. Address IP ownership, exclusivity, indemnity, and payment terms.
• Build Relationships: Strive to build good relationships with the procurement team. Understanding their needs and concerns can help you find mutually beneficial solutions.
• Be Prepared to Walk Away: If the negotiations reach an impasse and the terms remain unfair, don’t be afraid to walk away. Your IP and business autonomy are worth more than a contract that shackles your potential.

While landing a big contract can be tempting, small businesses shouldn’t be pressured into signing unfair agreements. By being informed, prepared, and strategic, small consulting businesses can navigate the procurement waters with confidence, securing fair contracts that protect their intellectual property and fuel their growth. Don’t be afraid to swim against the current – your unique value is worth fighting for.

Remember, everybody lives by selling something.

Testimonial

Since our workshop yesterday: Steph sold 80-100hrs this morning with his customer. Robert has followed up 3 or 4 leads and booked a number of customer meetings. I sat in a meeting and did a WWW with a customer, got 3 Fs out. Got another one in 30mins. And it’s before 11 am. A little confidence goes a long way eh. I’ll need more delivery capacity…

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