Why Do Vendors Try To Lock Startups Into Long-term Contracts?

Why Do Vendors Try To Lock Startups Into Long-term Contracts?

Determine the best terms for your startup for each contract

A small business or startup has to think carefully before entering into a long-term contract or service level agreement (SLA) when outsourcing professional services. “Locking” customers into long-term agreements can prove burdensome to a business that is just getting off the ground.

However, a long-term contract can be an economical, steadfast solution for some businesses – especially those that may be reliant on fixed goods or services like pest control or maintenance and repair. Let’s look further into why a long-term contract or SLA may be used by a vendor, and if long-term contracts are in the best interest of your startup.

The Long-Term Contract or Service Level Agreement (aka Statement of Service)

If you’re like one of these famous tech startups, you’ve come to realize that the way to lift your small business off the ground is through outsourcing. By outsourcing professional services, a startup can focus on other areas of their business as well as access talent that their payroll may not otherwise afford.

Some vendors will try to negotiate a long-term contract or service level agreement. They may call it a statement of service, but either form of agreement will indicate how long you’re “locked in” to their services. Sometimes, this period will be relatively short (2-3 years or less). Other times, a long-term contract may try to lock you in for 5 years – or longer.

When do Long-Term Contracts Make Sense?

For some businesses and in some situations, a long-term contract may suit their needs quite well. Your company may receive a discount say, on credit card processing fees, if you are willing to lock-in for a longer contract term. Suppliers of hard-goods like office supplies or leased equipment will often seek long-term contracts. Or perhaps if you’re leasing your office space, you may negotiate better terms of rent by committing to a long-term rental contract.

In these instances, it’s fairly easy to understand how a long-term contract may be in your interest. By removing some of the headache associated with continual re-ordering or maintenance and offering a discount, a long-term contract can in some instances be a great option for startups.

For instance, if you sign a long-term contract on leased equipment like a printer, that agreement often includes the maintenance of the piece of equipment. This could save a business money in the long run, and eliminates the need to have an expert printer repair person on staff. Or, a contract that supplies paper towels, toilet paper, office supplies, and other goods to your business at a set, reasonable rate. Your need for these items may not change much over a few years.

Notice, however, that we’ve only referred to long-term contracts that are in favor of an owner when the good or service in question is for a fixed, predictable need. When it comes to outsourcing professional services, a flexible short-term contract may be preferable.

Why Startups Benefit from Flexibility

Outsourcing professional services is a far cry from pest control or even IT services. Unlike these examples, which sell to you because of their regularity and not their innovation, a professional services vendor will cater their services to you based on your needs. And in a startup, those needs are highly likely to change over time. Therefore, flexibility can become a key issue in service agreements – especially if you’re unhappy with the service you are receiving.

When you sign a long-term contract with a professional services vendor, you are eliminating the incentive for them to evolve with current market trends or to continually ensure your satisfaction with their work. That’s not to say you won’t receive great customer service with a long-term contract, but rather to point out that for some vendor relationships, longer terms may not be in your favor.

It’s always a good idea to evaluate your potential professional services vendor and make sure they are transparent, flexible and communicative. Sometimes an agency that outsources for businesses will pull some moves that signal they aren’t working to ensure your long-term success. This could include retaining ownership of your domain, which would make it less practical to terminate your contract should you choose to do so. Even if some of these agencies are willing to offer flexible contract lengths, they may seek to retain your patronage out of obligation.

At Growthwright, we offer flexibility to our clients because our goal is to build a relationship that compels you to work with us for years to come, rather than contractually obligate you to do so. Learn more about the professional services we offer to startups by reaching out to a team expert today.


Danielle Thienel is a Business Development Analyst for Growthwright. If you are a start-up looking for services in finance, HR, Marketing or IT, contact us here!
What Kind of Entrepreneur Are You?

What Kind of Entrepreneur Are You?

SaaS startup owner contemplates pricing

Take our quiz to find out!

Everything from your type of business to your long-term profit and growth goals, provide you with a different path to startup success. Whether you’re still in the “idea” phase or a little further down your startup journey, your answers to these questions will guide you on your next steps.


Let’s begin!


1.  The following phrase best describes my business background:

a)  I gained experience in my field through hands-on work and/or vocational training/higher education. I am confident in my understanding of how my business operates and the function it performs.

b)  My knowledge is rooted in my education, technical experience, or both. I spent time developing a detailed business plan by myself or with colleagues.

c)  I would describe myself as highly-educated or trained in my field. I attended college and possibly graduate school, and pursued a degree that was humanistic in nature.

d)  Though I am highly-educated, I don’t use my degree in a traditional sense for my business.


2.  What best describes the type of product or service your business sells?

a)  My business is mostly service-based, and is an established business-type that is needed in nearly every neighborhood (such as a dry cleaner, mechanic, hair dresser, or restaurant).

b)  My business is primarily technology or communication focused, and relies on a highly-scalable innovative product that may or may not be tangible (such as a software developer, consulting firm, or marketing agency).

c)  My business model is what I’d call more of a profession, and I rely on relative skills gained through education and experience to complete projects.

d)  My business revolves around providing an idea or service to a limited number of people, and has evolved from a personal passion.



3.  When it comes to business, your personal motto is:

a)  No need to re-invent the wheel. I provide a service that is valued by my community.

b)  Don’t stay still for too long. I provide an innovative product that may evolve in nature to suit my clients.

c)  A well-crafted result cannot be rushed. I typically work on projects or cases where the resulting deliverable requires a process.

d)  My passion is my purpose. I enjoy working directly with clients to share a product or service that I truly feel will improve their life.



4.  I continue to stay knowledgeable in my field through:

a)  Short course vocational work, hands-on experience, and talking to colleagues.

b)  Research, TEDtalks, topical seminars or presentations, and by working with consultants.

c)  Staying active with a network of other professional colleagues, Reading and participating in issues and trends for my field, and furthering my education through courses and research.

d)  Attending conferences and gatherings to network with other similarly-minded entrepreneurs (maybe even from different fields), gaining insights from clients directly on social media and online forums, taking online courses to further my entrepreneurial skills.



5.  What is the primary goal of your business?

a)  To make as much revenue as possible by working and producing something.

b)  To grow a business that generates money by attracting lots of customers. My business is created in such a way that it could be sold.

c)  To feel personally satisfied and engaged with my work, while creating my own schedule.

d)  To expand my life in a meaningful way while still making time for my friends, hobbies, and other interests and priorities.


Your results:


Mostly A’s: You’re a Traditional Entrepreneur!

After many years of hand-on experience, it’s likely that you started your business to be your own boss. You may have a restaurant, store, mechanic shop, plumbing business, hair salon, or another business that serves a community function. The purpose of your business is clear, and it may be that planning and growing your business is not your forte. You’d much rather be hands-on with the day to day operations of your business rather than making marketing plans and crunching numbers.


Mostly B’s: You’re a Growth Potential Entrepreneur!

You founded your business around the core concept of growth – the bigger, the better! Your product or service is highly-scalable, dynamic, and strategically developed. You may be a software developer, business consultant, marketing agency, or you may sell technology products that you developed. It may be a primary goal for you to sell your startup and move on to another concept with growth potential. The back-end details of your business, whether it be planning, analyzing, or projecting growth, don’t daunt you. Talking to customers to gain insight, however, is something you’d prefer to leave to a consultant.

Mostly C’s: You’re a Project-Oriented Entrepreneur!

The humanities are what interest you, and for that purpose you’ve become an entrepreneur to pursue meaningful work in an ethical manner of your own making. Likely professions for a project-oriented entrepreneur include an author, a fine artist, a graphic designer, a psychologist, and even a midwife. You may refer to yourself as a freelancer or as self-employed rather than a business owner, as much of your work focuses on your own highly-developed skills and expertise. Profits are not as important to you as providing an excellent quality service or finely-crafted product. You are confident in your ability or process, as your training and commitment to ongoing education prepare you as such. However, you may find it difficult to describe your services to clients or to develop other areas of your business.


Mostly D’s: You’re a Lifestyle Entrepreneur!

It’s a passion for what you do and provide that has driven you to become an entrepreneur. For the lifestyle entrepreneur, it isn’t so much about what you do or sell as it is about why you are doing what you do. For this reason, your educational background may not traditionally align with your business. You truly feel that you are providing a service or product that can change your clients as much as it has positively impacted you. It’s important to you to balance your business with your personal interests – essentially, you still want to “have a life” outside your business. Making this business your primary source of income may or may not be important, and you’re likely to outsource some areas of your business (like accounting, payroll, and HR) to focus on your clients.


Next Steps

No matter what type of entrepreneur best describes you, remember to reach out to a trusted services partner that specializes in services for your type of business for help when you need it. Growthwright, for instance, works especially well with Growth Potential entrepreneurs who run B2B technology startups.

Danielle Thienel is a Business Development Analyst for Growthwright. If you are a start-up looking for services in finance, HR, Marketing or IT, contact us here!

Calling All Bootstrappers

Calling All Bootstrappers

SaaS startup owner contemplates pricing

Top 8 DIY Professional Service Solutions You Can Use for (Nearly) Free

Congratulations, you did it! You’ve developed a great product, one that has an edge on the market. Now you’re ready to take the next steps, ones that will turn your idea into a reality – a tangible business. While it can be daunting to build from the ground up, a plethora of free (or nearly free) apps exist to help you get your startup off the ground.

We’ve rounded up our top 8 options, from websites to bookkeeping, to get you started. Always know that while DIY is tempting, it does require a lot of time to achieve professional results. That’s why some startups decide to outsource professional services (or the things they aren’t specializing in).

1.  Build A Website

Get your business up and running with a drag-and-drop website builder and hosting platform like Wix. For as low as $5/month, you can access a database of customizable website templates and connect your site to a custom domain name. And while Wix does offer an e-commerce plan, you can also look at integrating e-commerce into your website with Shopify.

2.  Payroll, Benefits and HR Management

Manage payroll, benefit administration, and human resources with Gusto, a cloud-based application that simplifies HR. Gusto’s “Core” plan, their most basic, offers full-service payroll, employee self-service, benefits and workers comp administration for $39/month base plus $6/month per employee.

3.  Accounting

Make sure your bookkeeping is on-point with Wave, an app that offers free accounting software to entrepreneurs. Wave can assist you in handling accounting, invoicing, payment processing and payroll for a small business.

4. Customer Relationship Management (CRM)

Effectively market your clients by utilizing a customer relationship management platform such as HubSpot, which offers a free plan to small businesses and beginners. By cutting back on clunky data entry and showing you analytics on your efforts, HubSpot helps startups measure their marketing efforts.

5. Social Media Management

Posting to social media sites, blogging and managing PR can be downright overwhelming for a startup. If you’re trying to do-it-yourself, you’ll appreciate the scheduling and management capabilities offered by HootSuite. Users can manage up to 3 social platforms, access basic analytics, and schedule up to 30 posts for free.

6. Test Your Product

Utilize an inexpensive gig-service like Fiverr to beta-test your product before launch. Fiverr connects entrepreneurs with freelancers that offer a variety of services, making it easy to test and troubleshoot new product.

7. Streamline Communication

Create a single stream of communication between your employees with Slack, a powerhouse digital workspace. Slack allows team members to message through a workspace portal on various topics called “channels.” Small teams can use a limited version of Slack for free, but for as little as $6.67/month you can take advantage of other options like custom channels, group video and voice calls, screen sharing, larger file uploads, and search functions.

8. Digital Asset and Project Management

Manage ongoing projects easily with Trello, a collaboration tool that allows team members to create boards, upload digital assets, and track the progress of a project. You can access Trello for free, which includes one “Power-Up” i.e., an integrative application plug-in that allows you to customize your Trello experience.

Our best tip? Know when to DIY and when to outsource. If doing it yourself results in less than stellar results or if, quite frankly, you just don’t have the time – turn to a trusted partner. Growthwright offers a suite of professional services for startups, taking the headache out of doing everything yourself.

Danielle Thienel is a Business Development Analyst for Growthwright. If you are a start-up looking for services in finance, HR, Marketing or IT, contact us here!

Growthwright  © 2018

Build on Top of a Strong Foundation: Your Business, Your Home and Your Industry

Build on Top of a Strong Foundation: Your Business, Your Home and Your Industry

Building a business in healthcare IT is a little bit like building a house in an up-and-coming neighborhood. Both are in a competitive space that requires a strong foundation of a balanced budget, high-quality resources and a good reputation to stand the test of time. Unfortunately, the minimal resources of many start-up entrepreneurs or investors seeking to get their ventures off the ground can trigger cracks in the foundation. Everything from a lack of staff, to an unclear financial vision, to a decrease in reputation or awareness, work to hinder stability and growth.

In emerging IT companies, where the focus tends to be on The Big Idea, it’s easy to overlook or postpone the foundational operations of a properly run business. The battle for market share and notoriety is fierce, and the next industry-shaking earthquake of an idea will send the competition with the weaker foundations crumbling to the ground. A low-risk investment in operations will save your company valuable time and money while fostering an ideal environment for growth.


Financial transparency and strong cash management are the framework for a successful start-up. Then, there are the many business compliance and regulatory issues to be addressed before moving forward. But too many resource-strapped start-up companies overlook these issues in the early stages. Poor coordination and mismanagement of finances quickly lead to a decrease in value. A tailored support strategy can keep your financial posture strong and balanced.

“Financial transparency and strong cash management are the framework for a successful start-up.”

Human Resources

A business, like a home, is only as strong and resilient as its building blocks. Finding the highest quality Human Resources candidates to build your staff can be as challenging and consuming as hiring the others! This merry-go-round process can leave many with limited cash flow to compete for top talent. Differentiating yourself and doing the proper research across appropriate networks is key to recruiting and retaining quality staff members. Rushing to hire the wrong candidate just to fill a position is as detrimental to your growth as taking too long to pick and losing the perfect fit.


Much like landscaping, furnishings and decorating turn your house into a home, marketing and branding your business establishes your reputation and is as important in early-stage development as it is in its maturity. Partnering with a marketing team that understands your work and your value show the industry what you stand for. In a market over-saturated with great ideas, a true reflection of self and personality is the key differentiator behind a start-up company.

IT and Security

Disasters can strike at any time and sometimes lightning does strike twice. Breaches are one of the leading causes for revenue loss. An IT security team with a healthcare focus on compliance, is like a security system for your home. Also, if you are in the industry of healthcare-driven mobile applications, a trustworthy integration team will be necessary to integrate with EHRs and other software.

“An IT security team with a healthcare focus on compliance, is like a security system for your home.”

Building on a good foundation prevents uneven settling and provides a better life for your business, your clients and your team members. At Growthwright, we provide the foundation for disciplined growth while you innovate and focus on your strategic vision.

Danielle Thienel is a Business Development Analyst for Growthwright. If you are a start-up looking for services in finance, HR, Marketing or IT, contact us here!

Growthwright  © 2018

Health IT Start-ups: You Don’t Need Consulting

Health IT Start-ups: You Don’t Need Consulting

Health IT start ups, don’t need consulting. That may be alarming to hear at first, a disruption to a norm, but basic consulting for start ups is not as economical as it once was. For bigger organizations with the working capital for large scale strategy implementations, an outside consultant can be very beneficial. Many consultants brag about handling large Fortune 500 accounts, but do they really understand how the business began? Many don’t. Start-ups on a limited budget, and only a handful of people handling all the operations is a beast that consultants can only help with one piece of the puzzle. Many companies have reached out and agree that Health IT needs another solution.

I understand that start ups are already overloaded with tasks: handling all the hiring, HR, finance and marketing responsibilities on top of technical operations, so wouldn’t it be nice if some of those tasks could be taken off your plate and handled the right way for less than you would pay in salaries? Who wouldn’t want that? Go find a group that is trustworthy and knowledgeable in such a dynamic environment.

“Wouldn’t it be nice if some of those tasks could be taken off your plate and handled the right way for less than you would pay in salaries?”


Lead by example

As a new health tech entrepreneur, the best way to develop best practices is to see it firsthand. Most turn to a consultant that only offers recommendations for the contracted period, hand the reigns over and disappears like a warm apple pie at a company holiday party. You don’t need that apple pie or the consultant. Also, communication for the follow-up may be non-existent, leaving many lost and less well off than they were previously. Why not have a partner to help execute alongside their ability to coach? Whether it’s Finance, HR, Marketing or IT, individualized approaches are essential to a healthy foundation for growth in healthcare IT.

Self Help

Online searches for blogs and articles is commonplace to resolve an issue or find steps to complete a task. If you rely on only yourself to handle everything, and it’s working for you, great! If not, something needs to change ASAP. Your company’s future depends on it. Time consuming and expensive hiring or handling responsibilities on your own is tough and in early growth stages, the responsibility is large but costs must remain minimal. It’s financially unfeasible to believe a corporate consultant or a Google search will help get you there.

You don’t need a Fortune 500 consultant, you need a partner that wants to see you succeed. See how Growthwright’s services can be of help to you today. Email me at dthienel@growthwright.com.

Danielle Thienel is a Business Development Analyst for Growthwright. If you are a start-up looking for services in finance, HR, Marketing or IT, contact us here!