Always have a Contract

I live by that rule. Although there was a time when I did not heed that principle. When I first began offering my technical consulting services — way back before I got into startup consulting — I wasn’t always mindful of who I was dealing with, and thus my inexperience contributed to quite the pitfall.

So allow me to explain.

When I first began consulting, I was making nice money from designing websites and performing site administration. The clientele response was great and it led to a number of great customer relationships. After a few months, I found myself connected with a budding actress (then YouTube star, pursuing a TV career), who was looking for work to be done. Namely, this work consisted of designing and maintaining her website, designing her logos, mapping out product plans, and… pretty much everything she needed, so you can imagine the workload.

I was taking calls from her almost every day, usually every other. She was based on the West Coast, and I residing on the East Coast had to take her calls and work on projects til the wee hours of the morning. It was actually quite horrible, but I kept telling myself it would pay off. I had been blessed with more than enough projects the months prior, so I told myself to keep pushing. Oh, did I mention this work was pro bono?

Yup. All of the work that I took on — everything, was pro bono. I must have dedicated over 200 hours by helping her. All of this work was contingent upon her successfully getting onto national television. It was actually a high possibility — that she would land a spot on TV — due to the fact that she had managed to get onto a famous American TV channel for a competition-based show. I was quite thrilled the entire time, too.

So now that she had taped several episodes (which were planned on being released later that year), had a great website, flashy logo, and a growing all-organic product line (for which I designed the logo as well), we both thought things were going great. Or so I thought.

At this point, we’ll say that I was around the 200 hour mark. When I was in technical consulting, my hourly rate ran about $45 (considering a website would take 10 hours and the market rate for such a site was around $500 back then). So at this 200 hour mark and my hourly rate, I was up about $9,000 in consulting fees, not to mention creative royalty rights for developing her product line logo (which was featured on that show). All of this would be paid by her fancy TV contract, of course.

But before I get into all of that, let’s talk about the opportunity she presented me with. This woman put me in contact with one of her friends, and to keep anonymity for the sake of making this a lesson and not a TMZ bit, he turned out to be a big time TV producer for a show almost all you entrepreneurs and small business owners should know. If I mentioned the name of the show, many of you would smell it from a mile away, similar to how a shark is able to smell blood on the other side of its tank. Now this producer was not a main guy on the show, more like second in command, but nonetheless had a pleasant TV career.

I was then hired by this friend to help startup a social media firm, for which I would manage all web development & site administration. I was being cut into the firm for equity plus initial pay and the connections this guy had were phenomenal. This was all fantastic — I felt like I was in entrepreneurial heaven. My big break was coming and it felt so good.

Correction. It felt good for about three months.

You see, this is the part of the story where I excessively remind you to ALWAYS HAVE A CONTRACT. I felt like throwing up, and I almost gave up on my entire entrepreneurial career after what happened next. Imagine how you would feel if you lost out on a six-figure opportunity?

That’s exactly what happened.

I never signed a formal contract with the woman, and she took full advantage of that because the minute — hell, the second — a single agency picked her up, she ditched me. All of my calls were ignored, she did not text or email back. And that’s not even the worst part.

Again, imagine if you had lost out on a huge networking opportunity with an influential individual who possessed phenomenal connections? I lost that connection I had with her friend too. My equity contract was never signed with him either, but at least I walked home with a handful of paid invoices.

I just wanted to quit. Albeit my naivety got the best of me, the whole world seemed against me. I spent days after that trying to recover by reaching out to client leads, yet being ferociously turned down.

Although I did not quit, I took roughly a six month hiatus from my consulting work. Then I came back around, cleaned up my act, brushed up on my business law and reorganized my firm into a startup and small business consultancy. My goal became to help other entrepreneurs avoid the same mistakes I had made, to guide and consult them in the right direction.

Thinking about everything that had happened in the past, primarily this story, I see how it affected me and changed me for the better. My goal in life now is the educate entrepreneurs and startups and to speak to them about turning anything they do — any idea — into a successful venture.

Some pitfalls are completely unavoidable, and I have come to accept that. But if I can take that one entrepreneur, that one startup, and help them avoid or overcome that one single obstacle, then my work is meaningful.

Entrepreneurship is about relationships, community, and cultivation — and my goal is to build upon that through my writing and other ventures.

If there’s one thing that I want you to walk away with from this post, it’s that you must ALWAYS HAVE A CONTRACT. I really cannot emphasize this enough. Contracts are the oxygen of entrepreneurship.

Without it, well, you know.


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