Alex's Tech Thoughts

3 Reasons Not To Do A Deal

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There are a ton of reasons to do a deal. Maybe you’ll make money. Perhaps you’ll grow your userbase. It could be that you’ll increase your exposure. Or possibly improve your product. But for all the reasons why you should do a deal, no one talks about the reasons why you shouldn’t.

Here are three reasons why you should say no to a deal:

You don’t get along with the other side
This reason is fairly obvious but needs to be stated. This is not to say you hate the other side, but you don’t necessarily work well with them. Maybe they don’t respect you, maybe you don’t respect them. Either way, working with people you don’t get along with is a recipe for disaster. Before going too far- kill the deal if you anticipate a long-term headache.

They want too much customization
I’ve often experienced this. A company wants to work with you, but only if you do X, Y, and Z  for them. And Y is going to take you a few months and you’ll have to delay that really important feature or product release to re-prioritize for this big company. Unless you’re going to make enough money to justify it, kill the deal. Focus on building the scalable product, rather than the one-off for a big co. Big companies aren’t used to hearing no from startups, so you never know, they may chase you even further, offering more money or compromising and using your existing product. Unless that happens, kill this deal.

Short term win, but long term lose
There are some deals that seem like they are going to be awesome. Some may live up to the hype, others are short sighted and are long-term losses. Here is an example: a big company is going to integrate your offering that will improve their product. Maybe by a lot, maybe by a little. You close the deal and everyone is happy. Now when the big company attempts to integrate your offering, they screw the pooch and the integration is off. Maybe they put your offering behind a drop down. Maybe it’s something else. But the bottom line is NO ONE IS USING YOUR PRODUCT. Now, maybe this is about your product and you need to fix that, but at the end of the day it is on you. You closed this awesome deal but long term it turns out to be a lemon. If you are working on a deal and it gets to the actual integration/promotion part and the other company is going to do it wrong: walk away. Kill the deal. I’ve done this (walked away at this stage) a few times and while it can be painful, I’m confident it was for the best. I would have been spinning my wheels for months and it would have been a huge time-sink.

On the flip side, there have been times when I’ve done the deal before in the above scenario, and know that it ended up being a colossal waste of time. I had no one to blame but myself. You live and you learn.

All in all, these are three solid reasons why you would kill a deal. I’m an advocate of working on good things and only terminating deals if they will be detrimental to you or your business. Proceed with caution.

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deals business development