500 Startups Growth Handbook

Proposals, Closing, and Contracts

How you do it

- It might seem like a lot of extra steps to do the demo, negotiation, proposal, contract, purchase order, etc,but the less steps you go through on your end, the less likely you are to close the deal. There are points where someone can back out, and each step (unless it is necessary) is another stress point which could break the deal.
- That said, you need these stages if you are dealing with a complicated product or complicated client. As a general rule, the more expensive your ask price is, the more steps there will be in the sales process.
- Throughout the sales process, it’s best to take the next step when you have mutual agreement to move forward. After the discovery call, you’ll ask if they want to move forward with a demoor if they will sponsor a meeting with their boss so you can give them both a demo, etc. As you get toward the final stages, this same “permission” move becomes even more important. I never send a proposal unless there is an agreement that a proposal is needed to move forward. When asked for a contract, I often use this as a tool to ensure the terms are spelled out to each party before the contract is sent out. Discovering who needs to approve the contract’s terms will help you find out who will ultimately sign the contract.
- Typically you’ll want to use the first deal as a reason to write your proposal template. It’s ok to ask the client what they want to see. In building a contract, it’s a good idea to start with a simple template you like. Maybe a similar service that you have used and liked their contract that you signed. You can also ask your lawyer for samples, but be sure they understand the type of business you’re doing.

Common Mistakes Founders Make

- When creating proposals and sending out contracts some founders send the contract too early.
- You want to make sure you and your client agree on the terms,know who the signer is, and understand what their approval process is before you send them a contract. When you’ve done this right, you usually don’t have to wait very long for the signature to return (and sometimes it comes with the first payment).
- If you don’t know the usual process they go through, you’re likely to feel confused about why you haven’t heard back from them.

Examples

See the related links for examples of proposals and contracts. As mentioned in other sections, the higher the stakes the more likely you’ll have a longer proposal to contract phase as you’ll need the time and extra meetings to draw out the other decision makers and influencers.

Related Keywords

Sales Proposals, Software Contracts, Closing a Sale