3 Things You Need Know When Choosing A Vendor For Your Startup


The first time I signed up for a credit card processor it didn’t go as smoothly as I had expected. To be honest I wasn’t really prepared because I didn’t think we would get a customer that quickly. I guess there could be worse problems. I Googled and found some of the more well know startupy providers and reached out to them as well as Quickbooks. One had a financial requirements that didn’t work for us and the other one no one returned my call or email. Quickbooks was way too complicated. What was I going to do? I needed to process a credit card payment right away. I ended up getting a referral to a company that isn’t well known and not a cool startup. They were happy to sign us up. Since we were a new company, they gave us a short leash, however. We could only accept up to a certain amount of transactions, but it was a start. That is all I needed.

This was one of my first lessons in choosing vendors as a small company. Over the years I have hired more vendors than I can even count. From architects, to marketing agencies, PR firms, recruiters, accountants and lawyers. When signing up for products and services there is a lot of information and it is easy to get bogged down. The most important things that I have found that you need to keep in mind when you are hiring are the following.

1) Some Companies Will Not Work With You.

What?? So you are saying if I have the budget and want to buy a particular service, that sometimes the provider doesn’t want to sell to me?

Think about it this way. Small, new companies are basically the worst of all worlds: they are financially risky and more work.

For the credit card processor, they take on some risk with processing the payments. For that reason credit card processors will need to see detailed financials, banks statements and require personal details (SSN, etc) of the person signing up for the service.

Small, young companies are famous for being bad clients. Why? They typically do not have a lot of bandwidth and their employees are jack-of-all-trades. They have probably never worked with said vendor type before. This makes the client take up a lot of the provider’s time with questions and possibly fixing mistakes.

Would you want to work with a client that pays you a little, takes up a lot of your time and may go out of business? Probably not. Don’t take it personally when your business doesn’t yet meet the criteria to work with a particular vendor. Try looking for a vendor that caters to your company’s size. This may mean that you have to go with a more self serve or out of the box option, but that’s ok. They are all baby steps in the beginning.

2) Go With Your Gut.

I am not an emotional decision maker. In fact, some people have even called me robotic. When I research and interview vendors I make a list of the top 3 more important characteristics and then a list of questions. I ask all of the vendors the same exact questions and then review my notes. I try to avoid choosing someone because their sales person was more likeable. I want to choose the best fit.

One time when I was choosing vendor for a very important service and I followed my usual process. Of the top three vendors there was not much difference in their offering. To be honest it was really more of a commodity product.

Out of the three, two really stuck out. One was really eager to work with us and his presentations and follow up showed. The other seemed like he had no interest in working with us, but his firm was a bigger name. It would be recognized and there is some image aspect to the vendors you work with. But I just got a bad feeling. I still can’t get out of my mind when the salesperson was supposed to present his offering and came completely unprepared. After connecting to the big monitor and opening up a partially completed file, he blamed his assistant for not finishing the work. What a winner.

Anyway, we ended up going with this more well know provider who gave me a bad feeling. It went terribly. Not only was he unprepared to meetings going forward, he was late on every single delivery and made mistakes.

There are going to be vendors who you feel like you cannot trust. And that is ok, you don’t have to work with them. Unless they are a monopoly (or oligopoly) like internet providers in New York City. Usually your gut knows what is right.

3) Understand the Termination Details.

How long does the agreement go for? How many days notice do you have to give to get out of the contract? What is the process for canceling? Is there a fee to cancel? Get as much info as you can in writing here.

When you are a small company you want to keep your business flexible. It is easy to be tempted to sign up for three years of a service because they will give you 25% off. But if you think about it like this, one year is going to be cheaper than three years with 25% off. As a small business you really don't know what you are going to be doing in a few months, how can you commit to years for anything?

You can’t. That is why I absolutely always recommend signing up for short terms and the ability to cancel. If their policy is 60 days, ask for 30 days. Try to get the most flexible deal, but don't totally squeeze the vendor. If you do, they will not be able to provide you with the quality of service you are looking for.


Hiring vendors as a small business can be time consuming and confusing. You get information overload.

Sometimes products are services aren’t what you expect them to be. Like a tiny pineapple that fits in the palm of your hand. Who has ever seen that?  Take your time, do your best and try to protect yourself as much as you can without spending all of your time on work that doesn't move your business forward.