Supplier Agreements

Engaging the service of outside contractors and subject matter experts is a great way to grow your business quickly. We cannot, nor should we attempt to do everything ourselves. Engaging third parties can enable us to expand our skills set and capability, and set our business on the road to growth. However, it’s wiser to secure your business with supplier agreements contracts.

All too often we hear examples of contracts that have been entered into but the results quickly starting to fall short, or expectations are just not being met. This can all be avoided by having a solid legally considered supplier agreement in place.

The following is a fictional case study but drawn from a number of actual real life situations.

The scenario – Engaging a Digital Marketing Expert

Tina owns a professional services consultancy. She knows that she needs to do some marketing for her business and time is of the essence. She is referred to a digital marketing expert who is apparently “the bees knees”. An initial meeting with her is positive. Tina is promised a large number of leads within a short amount of time with guaranteed success and a great return on investment.

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After a while, Tina becomes suspicious. It’s not clear how much work is being done, what exactly IS being done, and when she can expect some leads to come through. She’s been told that these things take time and to wait another month or so for the leads to start coming in. She’s now paid 3 invoices and has had a few leads come through. None of which were valuable but she’s hoping this will change soon.

Another month goes by and still the same. Now Tina can’t get a hold of her digital marketing expert and she hasn’t returned Tina’s calls. She also gets an out-of-office response to say that the contractor is on leave for another 2 weeks and will respond then.

$5,000 has now been paid with little if any return. Tina is enormously frustrated and is starting to lose sleep over it. Her entire marketing budget is wrapped up with this contractor.

She’s also embarrassed and feels stupid that she trusted this person to do the right thing and deliver what she promised. She’s been in business for a while and thinks her instincts are good.

Not on this occasion.

She sees no way of getting the money back. Therefore she puts it down to a learning experience – an expensive one at that. Now she can’t afford to pay for the marketing, financials and legals which she would otherwise have had. It’s not going to destroy her business but $5K is a large amount of money for Tina that she can ill afford to waste.

The Key Learnings:

Supplier agreements contracts is vague and uncertain about delivery of services and timing without clear expectations of deliverables and communication.
You need to consider a whole host of issues when entering into a supplier agreement
There’s a whole host of providers running around in this unregulated industry. Moreover, there’s a big knowledge gap between small business owners and marketing/IT/online marketing service providers.
Tina now knows that if she had the supplier agreement reviewed and had requested to contact 3 references of current/previous clients (asking specific questions about the provider and their previous results) before entering into the contract, she may have saved a lot of heartache. She appreciates that she needs to do a certain amount of “due diligence” in these transactions in future. She’ll remember to take her time in deciding who to choose before getting “sucked in” by clever sales approaches.
You should be very wary of anyone that does not allow you to contact current/past clients to discuss their performance as a supplier.
Have a look on their website and see who they have done work for. Pick up the phone and give them a call and see.
If there are any alarm bells or warning signs whatsoever, don’t ignore them. Do your due diligence.

Supplier Agreements