9 Warning Signs That a Deal Is Going South

October 12, 2017

11:30 am

Negotiating a deal is an art form in itself and knowing red flags when a deal is going south can save you a ton of headaches and stress. We asked nine entrepreneurs: what is one warning sign that a deal with a partner or vendor is not going to work out. Here’s what they said.

Long Wait Times Between Communications

I find that when a partner or vendor takes a long time to respond to our calls or emails, it’s not going to work out. I want to work with companies who are eager to work together, and a lack of responsiveness tells me that they are either too busy to work together or they don’t have their act together, and I will constantly be frustrated/underwhelmed by them and their performance.

-Diana Goodwin of AquaMobile

You Have a Hunch

It’s easy to overlook something so small as what your instincts tell you. But if you look back at many of the past deals that didn’t pan out, I’d venture to guess that if you really thought about it, your gut was telling you it was heading in this direction. It’s not everyone’s style, but listening to your instincts is a powerful tool in navigating decisions.

-Darrah Brustein of Network Under 40

You Get Inconsistent Information

When a story or terms change after the first communication, it’s a strong signal that you should walk away and not waste more time pursuing the relationship. Forget a three-strikes policy. With me, it’s one strike and you’re out. There are plenty of potential partners and vendors. Don’t waste your time with ones who aren’t 100 percent honest and upfront from the beginning.

-Jonathan Long of LAWYE.RS

They Can’t Take Responsibility

When performance is lacking, they are quick to blame everyone else and take no personal responsibility. It’s next to impossible to change people and should be a major red flag if they can’t take responsibility for their own actions. This usually shows up relatively quickly in the relationship and needs to be handled immediately. Consider replacing rather than trying to change behavior.

-Drew Gurley of Redbird Advisors

They Squabble Over Minor Details

The easiest way to predict a failed partnership is by the interest and trust emanating from the person representing the other business. When they don’t trust you, and insist on detailed explanations, nitpick contract details, or make a large number of small changes to a fairly simple agreement, you know your partnership is in trouble.

-Joshua Dorkin of BiggerPockets

They Bait and Switch

You have had a great conversation and feel things are going well. You ask to have the other person write everything that was agreed upon and send it to you for further mutual discussion. When this person sends you over the written details of the conversation, it looks nothing like what was agreed on. This means one of two things: a bad listener, or untrustworthy person. Neither are good options.

-Jay Johnson of Small Lot Wine

They Don’t Have Any Questions or Concerns

When quality business leaders look at a deal and like what they see, they pull out a microscope and look for blind-spots that may negatively impact their business. Sometimes they mull it over and follow up with questions later, but such due diligence is expected of anyone worthy of partnering with. The only type of deal that doesn’t raise questions or concerns is the kind that won’t happen.

-Manpreet Singh of TalkLocal 

They Argue Against Non-Disclosure Terms

Depending on what type of company or individual we may be working out a deal with, there will often be mutual non-disclosure/non-circumvention provisions. They’re mutual, and hold my company to the same expectation. So if a potential partner starts arguing the term of NDNCA down to less than 24 months, I get concerned that their heart isn’t in the right place.

-Nicholas Nadjarian of Industrial Motor Power Corp. 

You Have Conflicting Values

One of the biggest indicators of a successful deal that most people don’t know about is value alignment. The first discussions that ultimately decide if both parties will make the deal cover the financials, plan and strategy, but the real sign of a good deal is the values that they hold. These values determine the way they work and, in turn, their compatibility to work with your business.

-David Tomas of Cyberclick

This article is courtesy of BusinessCollective, featuring thought leadership content by ambitious young entrepreneurs, executives & small business owners.

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Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. YEC members generate billions of dollars in revenue and have created tens of thousands of jobs.

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