Should a founder negotiate sales contracts?

Should a founder negotiate sales contracts? – When you’re building your startup and you’ve hired the first couple of people in your sales team it can become a frustration for a founder to have to constantly jump into sales negotiations. Despite this it’s pretty common practice. Founders know the business inside out and have the authority to make decisions that no one else in the business has. But as your business grows the role of founders in negotiating sales contracts stands at a crossroads. You start bringing on legal people and operations managers who also have expertise in these things and can take some of the pressure of the founder. But is there a time that the founder should step completely away from this process? Let’s have a look at the different things at play.

Understanding the Importance of Sales Contract Negotiation

Sales contract negotiation is the cornerstone of any successful (and fast) business deal. In the context of an early-stage SaaS startup, where resources are limited, and every client matters, the ability to secure agreement on terms quickly can be a game-changer. Effective negotiation ensures that the company not only closes deals but does so with terms that align with its strategic goals and financial health.

The Founder’s Involvement

In many early-stage startups, founders are deeply involved in the first thirty or forty deals and they continue to be involved in various aspects of the the pipeline. Their passion for the product and in-depth knowledge of the market make them invaluable assets in negotiations. Founders can bring a personal touch to the process, demonstrating a commitment to the client and a willingness to go the extra mile.

However, founders are also tasked with numerous responsibilities, and as the company grows, their time becomes increasingly scarce. Balancing hands-on involvement in sales contract negotiations with other time sensitive tasks can be challenging. It becomes essential for founders to delegate effectively while maintaining oversight.

Sales Team Involvement

As startups scale, dedicated sales teams often take on the responsibility of negotiating contracts. Sales professionals bring a unique skill set to the table, combining market knowledge, communication skills, and a deep understanding of customer needs. Having a specialized sales team can streamline the negotiation process and allow founders to focus on strategic initiatives.

However, it’s crucial to strike a balance between sales incentives and what’s good for the company. Sales teams, while skilled in the art of closing deals, may lack the nuanced understanding of the company’s long-term vision or the legal risks involved in contracts. To mitigate this, regular communication between the sales team and founders is key. This ensures that the negotiation aligns with the overall strategy and values of the startup.

Legal Expertise – Founders Blind Spot With Contract Negotiations

Legal expertise will keep you from getting into trouble later. Having a dedicated legal team or consultant can safeguard the startup from decisions that have massive roll-on effects, ensuring that contracts are not only good but also compliant with applicable laws and regulations. Legal professionals can provide insights into potential risks, protect intellectual property, and establish a solid legal foundation for the company.

However, relying solely on legal expertise can sometimes lead to a disconnect from the commercial aspects of the negotiation. It’s essential to foster collaboration between the legal team, founders, and sales professionals to create well-rounded agreements that balance legal protection with business objectives.

In the early stages of a SaaS startup, the question of who should negotiate sales contracts is not a one-size-fits-all scenario. The best approach often involves a collaborative effort, leveraging the strengths of founders, sales teams, and legal experts.

Founders bring passion, vision, and a personal touch to negotiations. Sales teams contribute market knowledge, communication skills, and a focus on closing deals. Legal experts ensure the contracts are legally sound and protective of the company’s interests.

By fostering communication and collaboration between these key stakeholders, startups can navigate the negotiation maze more effectively. As the company evolves, the delegation of responsibilities may shift, but the emphasis on collaboration should remain constant. In the ever-changing landscape of early-stage SaaS startups, a well-balanced approach to sales contract negotiations is crucial for sustainable growth and success.

The Time Nightmare that is the Startup Sales Cycles

For your tech startup, the sales cycle is a critical journey that often encounters roadblocks in the form of prolonged contract negotiations. One of the key challenges faced by these startups is the significant time investment required in these negotiations. The intricate details involved can stretch the cycle, hindering the rapid growth that startups aspire to achieve.

Managing Legal Teams in the Startup Hustle

Tech startups, especially those operating in the B2B space, often grapple with the task of managing legal teams efficiently. This challenge is exacerbated when deadlines loom, such as the end of the month or quarter. Ensuring that legal teams are working on priority tasks becomes important especially at end of month or end of quarter when you’re trying to get things over the line, and founders may find themselves questioning their level of involvement in this back and forth process.

Senior Leaders Seeking Oversight

Senior leaders, including founders and heads of sales or finance, need a comprehensive overview of the progress made in legal negotiations. The lack of transparency in understanding where each contract stands can impede decision-making, potentially affecting the strategic direction of the company.

Reviewing Redlines: A Founder’s Dilemma

Founders and senior leaders often find themselves wasting mind numbing time reviewing contract redlines. Personally I absolutely hate this. Deciding what can and cannot be approved becomes a meticulous task that demands careful attention. This process, though essential, diverts key decision-makers from other critical aspects of steering the company forward.

Liberation Through Contract Sent: A Game-Changer for Startups

Contract Sent, a contract management software designed with the specific needs of tech startups in mind. It not only acknowledges these challenges but provides a suite of features to address them head-on.

1. Dashboard Insights:
   • Contract Sent introduces dashboards that offer real-time overviews of contract negotiations. To have a founder negotiate sales contracts means that you need to enable them to easily identify the stage of each negotiation and understand who is managing the process, enabling more informed decision-making.
2. Metrics Tracking for Strategic Decision-Making:
   • The platform includes a dashboard for tracking contract metrics. This empowers founders and senior leaders to measure and analyze key performance indicators, ensuring data-driven decision-making.
3. Kanban Board for Efficient Management:
   • The incorporation of a Kanban board streamlines the management of contract stages, enhancing efficiency and providing a visual representation of the workflow.
4. Version and Clause Tracking:
   • Contract Sent’s version tracking ensures easy navigation through different iterations. The tracking of important contract clauses ensures that no critical detail is overlooked during negotiations.
5. Advanced Contract Comparison Tool:
   • The platform’s advanced contract comparison tool revolutionizes the review process, facilitating quicker approvals and minimizing the time spent on redlines.
6. Task Management for Legal Teams:
   • Setting up a process to have a founder negotiate sales contracts needs to be structured in a way that frees up a lot of the communication hassle for them. Founders can efficiently manage the workload of legal teams through the platform’s task management feature, ensuring priorities are aligned, especially during critical deadlines.
7. Unlimited Users for Collaborative Success:
   • Recognizing the collaborative nature of startup environments, Contract Sent allows unlimited users, fostering teamwork and collaboration among all stakeholders.

So, Should Founders Personally Navigate the Negotiation Maze?

The question remains: Should founders personally navigate the intricate maze of sales contract negotiations? The answer lies in striking a balance. While founders bring unique insights, passion, and strategic vision to the table, their time is a precious resource. Contract Sent enables them to strategically involve themselves in key negotiations while entrusting the platform to handle the intricacies efficiently.

The Path Forward: Founders as Strategic Guides

As you grow you’ll continue to ask should a founder negotiate sales contracts. Founders can leverage contract management tools to be strategic guides in the negotiation process. By staying informed through dashboards, they can provide guidance aligned with the company’s vision. This approach allows founders to focus on overarching goals and high-level strategy, leaving the operational details to the capable hands of Contract Sent.