Define It Before You Buy It!
I usually suggest at the very beginning of a startup to consider using partners. Of course there’s a right and wrong way to do this. There would be less chance for a problem, less frustration and even avoided agony if there was a clear definition of what the service or product will be.
At same time if done poorly it could end up in wasted time and money. Working with student entrepreneurs, there is a tendency when technology is needed and there is a design requirement for the product, many entrepreneurs turned to student engineers to and have two problems, when a student engineer with limited experience and ability is not capable for the total task. This is made worse if there is a poor definition of the product. The other problem that can occur, is that outside the team, the person lacking the same passion for a This is startup, and therefore at times they drift away with their own priorities. This can be happening if the engineer is doing it free.
I can tell you that when the above is attempted, the majority of situations I come across, either have a verbal description of what’s needed, or poor attempt at a specification. This can be avoided by seeking technical experience of a coach or mentor. Actually many of the universities I worked with, there are numerous so called EIR’s, experts in residence, that are willing to help student entrepreneurs. In one University I was helping, there were 400 EIR’s, so you have to expect there were some EIR’s with a strong technical background.
In cases where a product needs manufacturing, usually a prototype has to be built, and expensive tooling might also be required. In these situations, it is extremely important to have a well-defined specification, and to support this a well-defined agreement. Obviously products in the manufacturing will need an outside partner. In buying a product from an off-shore company it is extremely important to get it right before allowing shipments. The speciation should include the criteria for acceptance and how to evaluate and test, before acceptance.
A problem that I’ve seen and contributed to sometimes in my career has to do with buying service or product that were new to both sides of the deal. A handshake won’t do it. Without the specification, the buyer continued to add desires to the product and the seller continued to add them without any claim for changes in the agreement. I have seen suppliers give up and walk away when the frustration level reaches a high. The result is both sides lost. I have seen this happen with web page designs. One serious disagreement occurred because both parties could not agree on a particular color.
One of the first major agreements is a term sheet. I believe, to get it right, the inexperienced Entrepreneur must get help, or the agreement may end up slanted to the investors. It’s a detailed document anyway with many new words and ideas that a lawyer and mentors can be familiar with.
There is no doubt before an agreement of any sort is made the terms of the agreement must be clearly defined in order for the partnership to be successful.