Adatree’s Jill Berry on how to spot red flags in business deals
There’s a hunger that every startup founder understands: the need to be understood and taken seriously by industry peers, partners and clients. But when a fledgling business is extending themselves to grasp a steady revenue stream, there’s one skill I believe founders should hone to balance this hunger: the art of knowing when to walk away from a deal.
I recall a piece of wisdom from my old boss Peter Haig, the co-founder of Tyro Payments: “Not every customer is a good customer, and not every partner is a good partner.” It’s something I think about when deciding who to do business with so that I’m clear-eyed when I evaluate an offer.
Three common red flags
Cheap but high maintenance
The customers and partners we try to steer clear of are those who are high maintenance but like to lowball on payment. Usually, they negotiate hard on price and/or request a lot of inclusions and customisations. So you’re either being paid less or you’re constantly bending over backwards to accommodate them — or a nasty combination of both.
One of my favourite sayings is “companies die of indigestion, not of starvation”. In this case, think of the opportunity cost: if you are prioritising this client, what other parts of your business are being neglected? To what end? Being able to spot a cheap but high-maintenance partner and walking away before you’re in too deep or the relationship sours is a useful skill.