Shawn Moore | Crain's Orlando

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Shawn Moore

Background:  

Orlando-based Solodev is a software company and the developer of Solodev Web Experience Software Solution, which is used to build, manage and power hundreds of award-winning websites and mobile apps while providing scalable, secure infrastructure and support.

The Mistake:

Many of our contracts were very loose and unenforceable in the beginning. And as we started to grow, potential investors, our attorneys and CPAs – everyone – wanted to see our contracts. And we really didn’t have very many. We had very loose, unenforceable agreements with vague termination dates and start dates.

So it was a big, difficult process for us a company [to put them in place]. It took about a year and a half. Over time we had gotten better and better with contracts, so it was kind of a mixed bag. Not only did we have to go back to our customers that we’d been working with for, let's say, five years, and say, “Hey, by the way, we really don’t have an agreement, can you sign one?" That was a big exercise for us to go customer-to-customer and start getting them into an actual current agreement that actually had some kind of enforceability to it.

A lot of good things did happen for us as a result of this – and we worked with several organizations that did have leadership changes. And because we had a contract in place, we were not on the chopping block.

Because we had a contract in place, we were not on the chopping block.

The Lesson:

In the beginning, when companies first engage their customers, a lot of time it’s handshake deals. It’s emailed contracts – just very loose-termed agreements between the vendor and the customer. It’s typically not a big deal, but over time your customer changes. The people you’re doing business with may lose jobs. Leadership changes. Your staff changes. In the beginning, you might have been doing business with the C-level executive, but now your staff is working with their staff or, in fact, there’s a whole new staff

And when that happens the details of the engagement become vague and not so clear. That can result in actually losing the customer sometimes. And if you have it very clearly written out – what your role is, what the customer’s role is, what your agreement is – then it’s easy for a leadership change to transition into the relationship.

Another thing that happens oftentimes is, not only does leadership change happen but [not having a firm contract] makes it hard to increase your rates. You just have this vague agreement where nobody really knows what they’re paying for. So the contractual agreement is always something you can go back to whenever the scope changes to say, “Look, this is what we’ve been contracted for and this is what you’re now asking for, and clearly we’re doing more.”

So it can obviously help you get more money and maintain that client relationship in the long term. It’s really in both parties’ best interest. It’s better for the customer because they actually have a defined service level agreement. They know what to expect from you. You know what to expect from them. And it kind of defines what happens if there’s a disagreement.

Ultimately, I don’t know if it’s something that you ever get totally right. Even today we still want our contracts to be better.

Follow Solodev on Twitter at @solodev.

Photo courtesy of Shawn Moore

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