The Top 3 Reasons Why Small App Development Companies Don’t Get Bigger Contracts (Part 1)

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     Kissimmee, Florida — If you own or happen to be a part of a small applications development company then you are probably well aware of the many challenges that these particular organizations face when attempting to acquire let alone maintain bigger contracts.  While big businesses generally welcome independent contractors with open arms to join or to enhance a new or existing in-house team, most of these same companies take a very different approach when it comes to hiring independent app development companies.  Fact is, smaller app development companies tend to be too problematic to work with, which means that the liability is often too great for a larger business to take the risk or to exhaust the mental energy.  This is aside from the fact that many smaller app development companies tend to over-characterize their true capabilities.  So when a larger company considers a smaller app development company for a contract, areas that they are more than likely to be confronted with are:

 

     (1)  They don’t know how to negotiate the contract;

     (2)  They don’t have a “real” team of experienced app developers; and

     (3)  They generally almost NEVER have the appropriate insurance coverage, which means that they the larger company couldn’t hire the smaller company for the job even if they loved them.

So What Do You Do

Bid for big contracts

     The reality is that app development has never been bigger than it is today.  And mobile app development, whether on Apple’s iOS or Android, now present opportunities to both freelancer app developers and full-scale app development companies at an unprecedented level.  The point is that the industry is booming, and there are more development jobs and contracts available than ever before.  But in order to succeed as a smaller app development company, these three challenges must be overcome or satisfied if you are looking to acquire the bigger business contracts.

     The next couple of blogs will provide those small app development companies with strategies for improving their position with bigger contracts.  For now, we will begin with this:

 

  1. LEARNING HOW TO NEGOTIATE THE CONTRACT.  Just in case you are not aware, closing the deal and knowing how to effectively negotiate a contract is pivotal to both acquiring the business and keeping it.  It requires thoughtfulness and foresight.  But in order to establish these two very important attributes, you and your company need contracts and actual contract negotiating experience.  It is this experience that helps your business to earn its project “chops.”

One of the first recommendations is for your company to find projects working with small to medium-sized businesses first (SMBs).  This is not a shot against you or your company.  In fact, it’s quite to the contrary.  Working with SMBs is not about limiting yourself but rather creating opportunities to learn and to mature from within the industry, while minimizing the possible risk or initial liability that could be associated with larger projects.  Smaller projects give you a chance to fine tune the needs of both you and your clients, each being factors inherent to every contract.  But before you even get that far, you will need to compile a few agreements even in the early phase of the project.

     Most business people are familiar with NDAs (non-disclosure agreements) and non-compete agreements.  These are standard within practically every industry on the map.  More so than in many other industries, these are a must for app development companies.  Why?  An NDA is designed to protect the integrity of the often proprietary information shared or exchanged between you and the prospective client.  It is a formal way of explaining that whatever is discussed between your company and that prospective client is to remain confidential.  Without an NDA, your idea or strategy is free game to anyone with an inkling of talent.

Contracts For Freelancers
Website Contracts

But Can You Win

     The non-compete is just as vital because it sets up cursory boundaries with respect to the project application which, by signing, the prospect agrees not to cross.  The client is simply saying that they are not going to take your idea and build something similar or that may be considered in competition with the app that you are discussing.  Remember that both of these agreement are merely deterrents against foul play.  The reality is that, in business, app development is largely based on a creative idea or process, and there is always a looming threat of idea theft.  But the non-compete does place that prospect on notice that they have been duly warned.  So if that line is crossed, they will not be surprised when the lawsuit arrives at the door.

     One other thing about these two commonly used agreements, do not be surprised if the client invites you to sign one as well.  Again, they may be discussing an app that their team has come up with.  It is the client’s way of equally ensuring that you will not run off with their idea as well, share the information with another party, or develop something that could possibly be considered a rival to their concept.

     Other initial contracts that you may want to consider involve employment.  These are used whenever hiring or securing the talent that will be discussed in #2.  Consider adopting both employment and independent contractor agreements, and each should be written with emphasis on protecting the integrity of your client’s information, and your app development and design strategies.

      If you have the resources, consider hiring a company that specializes in preparing contracts for such a purpose.  While sites such as Legal Zoom are quite credible resources for templates, it will never compare to having an actual person or team to prepare or review those contracts for you.

Take Your Time

     It will take time for a new or small app development company to become acclimated to accurately determining the appropriate calculus for the right number of team members you will require for each project.  Factoring too many, can be as costly of a mistake as not factoring enough.  The same goes for anticipating the appropriate supporting hardware and software as well as the time that is required to test, retest, and complete the app.  But as you begin to negotiate your deals, these are elements that you will need to become more proficient at determining.  Working with SMBs keeps the risk factor low.  Where with an SMB, you may over-estimate by one employee or a few hours for example, with a larger business you could be looking at 10 to 20 people or months and months of unexpected working hours.  And attempting to renegotiate based on these novel mistake could severely impair if not destroy a business relationship.

    The beauty of being a smaller app development company is that they are extremely more flexible than most larger companies, and there tends to be much less red tape involved.  But in order to compete in the world of big contracts, you have to represent yourself as a well-oiled machine with all of the cogs in place.  Tomorrow, we will continue to piece by introducing areas to consider with respect to the second obstacles, “They don’t have a ‘real’ team of experienced app developers.”

 

  1. D. Brennan is a leading contributor for The Jordan Effect, and author of 51 Successful Business Tips For Millennials. He is also the author of the soon-to-be-released anti-American history novel, “Reciprocal, America’s History:  The Saddest Story Never Told.”  51 Successful Business Tips For Millennials is scheduled to be available in November 2018.  Reciprocal is slated to be released for pre-orders on November 5, 2018 as an eBook on www.Amazon.com, and in paperback at www.CreateSpace.com.  To contact the writer directly, email him at ndbrennan4111@gmail.com.

About the Author

N. D. Brennan is a contributor to The Jordan Effect, the creative mind behind The Social Media Millionaire book series, and the author of 51 Successful Business Tips For Millennials. He is also the author of the anti-American history tale, which draws an answer to an unprecedented answer to an unimaginable question: "What if white people were slaves?" 51 Successful Business Tips For Millennials is scheduled to be released this month. Reciprocal is available as an eBook at www.Amazon.com, and in paperback at Kindle Direct. To contact the writer directly, send your emails to ndbrennan4111@gmail.com.

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