How can startups ace their vendor negotiations?
Many startup founders dread negotiations with vendors, especially when they have lean or no procurement teams. Unlike enterprises, startups feel they lack the leverage to secure favorable deals. In this economic environment, everybody is trying to conserve cash. Software expenses are the next big expense after employee expenses for startups.
During COVID, most startups spent a lot on software, and now they are trying to figure out how to cut costs by at least 10-30 percent. The CloudEagle team and I have helped several enterprises and startups negotiate with SaaS vendors. In this dynamic era of innovation and agility, startups are not just the underdogs but the disruptors, visionaries, and change-makers. They bring fresh perspectives, growth potential, and a penchant for rapid decision-making.
What to look for in a third-party vendor while cutting budgets
At the end of 2022, many companies (83 percent) feared a recession in 2023, with 60 percent of enterprise-level and 45 percent of SMB-level businesses preparing by tightening budgets, reducing non-essential spending, renegotiating payment terms and other strategies. Yet SWZD’s 2023 State of IT Report also found that over 50 percent of companies planned to increase YOY IT spending, with budgets expected to grow 13 percent YOY.
That same report indicated that 23 percent of companies had already implemented -- or planned to form -- strategic partnerships.