How to… avoid contract delays
We’re at our best when we are sitting across a metaphorical small round table, warm beverages in hand, giving advice to people we want to help succeed. (It’s Cawfee Tawk, bubbelehs. Advice like buttah.) This question recently came in, and we figured it could be helpful to others if we shared our answer more broadly.
Question:
How can an agency avoid a lot of time and money investment in biz dev/sales with large corporations (negotiating SOWs, MSAs, legal, etc.) only to have the work get canceled due to issues out of individual control (reorgs, budget freezes, etc.)... or is that just the “cost of business”?
Answer:
There is no way to entirely avoid or get ahead of large company pivots (from reorgs to budget freezes, layoffs to strategy changes), and, yes, some of that is just the cost of doing business. However, small studios and agencies can do some things to mitigate damage and minimize impact of a potential client pulling the plug after a lot of preparation but before “work” starts:
First, understand that contracts will never protect you from client changes—they can never be the business safety net that you want them to be. (See Principle #4 here.)
Get a small Phase 1 approved so you can get a team in place, strategically plan, and cover leaders’ time at the outset. Starting with smaller projects/engagement sizes can get a starter phase of the project more quickly approved and garner initial payment from the client. Learn what the financial threshold is for your client (e.g. under $100k). There’s always a figure at a large corporation below which stakeholder approvals are either not needed or require fewer procurement hoops, MSAs, or other obstacles.
Build in risk mitigation to your internal Biz Dev process. Be prepared for, “What could go wrong here?” This doesn't mean you aren't optimistic and it doesn't mean you don't plan for positive outcomes, but it means you also are better prepared for "if X, then Y" scenarios.
Have savvy Producers in influential roles on your team who quickly build strong relationships in order to ask questions and understand what's happening within the client org. This expert relationship building, coupled with risk mitigation tactics, can help you create moments to ask your client contact questions such as “are there any internal scenarios that could prevent this engagement from happening?” and get real answers. (Mutual trust is key for this to work.)
If you have Producers with a real pulse on clients and an understanding of the client org/business who are also connected to Biz Dev, you can also have a better understanding of “likelihood of approval” for engagements. Develop a shared language and metric for Producers to indicate “likelihood” not ruled by optimism but by realities on the ground and clear instinct. For example, if you have a $750k project estimated to start in two weeks with a brand new client that seems a little chaotic and shifty, but it's taking 3 months for contracts to happen, you could mark that at 30-40% likelihood to happen. This consistent metric can help the business leaders/owners have a more realistic sense of what work might happen.
Review how you handle hiring for new engagements, as well as internal time or resources spent working on contract approval. If a new client has lower than 60-75% likelihood (depending on your own internal capacity for risk) of approval, do not lock in the team (including hiring if that is needed) or agree to a timeline until you have a signed contract. This means that if they take a while to get the engagement formally approved on their side, they will need to learn upon signing when you can start/when the team is available. In the case of projects with fixed launch dates (i.e. a product launch), you need to talk early about scope changes (fewer deliverables) or team needs (more resources) in order to meet expectations in a shorter period of time.
Do an internal review to see if there are any ways to change how much you need to tap external legal resources (and then spend for external legal fees) in these situations in order to at least mitigate or limit that hard cost. Is there a leader in Ops (such as the COO or CFO) who could do preliminary reads of contracts, or approve fairly standard ones? That will allow you to tap external counsel only if it’s a very complex contract, or a final round of documents for a very likely engagement.
In all, there is no entirely avoiding projects being shuttered before they even start—and there are always factors out of your control. But by building strong relationships out of the gate, including creating a strong understanding of your new potential client’s org and circumstances, you can be in a better position to navigate change.
