Legal Help For Startups – How Much Is Enough?

Epicom hired a new law firm in November and the selection process reminded me of how our legal needs have changed over the last few years.  I suspect this is the same for many companies experiencing high growth.

Epicom has gone through several phases in its need for more sophisticated legal help.

  1. No legal help during the early days when we had no money.
  2. Minimal legal help from a solo general practitioner.
  3. More legal help from two solo practitioners with different specialities.
  4. Even more legal help from a small firm specializing in high growth technology companies.

In retrospect, this structure has worked well and, I think, balanced our need to keep costs down without exposing the company to undue legal risks.  As the company grows, our legal needs have definitely grown too and the money we spend on legal expenses as a percentage of revenue has increased.

Here’s how we addressed our legal needs without spending too much money along with some things I would do differently knowing what I know now.

The Early Days

In the early days, many startups have no money for legal help.  This can be a scary situation because mistakes can be made that might affect the future viability of the company.  Talk to lawyers and they will tell you that you must spend money on legal help to keep yourself out of trouble.  But business owners have to balance legal risk against all of the other risks of running a business, like running out of cash, or not having any new customers.  A strong legal structure is of no use if your business goes bankrupt for other reasons within months of starting.  In the early days, when cash is scarce, do as much legal work yourself as possible.  Read books, take classes, and ask other business owners for contract templates they have used successfully.  You will save money and the lessons you learn will help you in your business as it grows.  If you are completely unfamiliar with business law, I strongly suggest taking a class to ground yourself in the basics.  I took a business law class in graduate school and my business law text sits next to my desk to this day and is not infrequently referenced.

I’m a big believer in doing most of the legwork yourself during the early days of a new startup, but hire an attorney to review your work and make sure no mistakes have been made.  Smart attorneys who enjoy working with startups will balance your needs with theirs and realize that helping you get your business off the ground will benefit them with additional business in the long run.  This should help you keep overall costs down.

Here are some things you can do yourself in the early days to save money:

  • Business Structure – In Texas where I live, creating a corporation or LLC is fairly straightforward.  Ask an attorney to help you with the decision of what business structure is correct, but do the leg work of completing applications yourself to save money.
  • Contracts – Before engaging an attorney’s help in writing customer contracts, spend some time considering the business objectives of your contract.  What are the terms and conditions of doing business with a customer that are important to you?  What risks do you want to avoid?  What risks can you accept?  Look for examples of contracts that companies similar to yours have used and learn from them.  What provisions are they including that you should also include?  If you find an agreement that seems especially suited to your needs, ask if you can use the agreement as a template for your business.  Once you have all of your business needs outlined, an attorney can add (or modify) the appropriate legal language with far less effort and cost.
  • Customer Negotiations – If your business is a service business like ours, expect customers to ask for modifications to your standard contracts.  It can be frustrating when the cost of legal advise on a requested contract change is more expensive than the value of the contract itself.  Learn where to draw the boundaries with prospective customers so they know what you are willing to accept and what you will not accept before attorneys are brought into the process.  An attorney can advise you on legal issues, but the business decision-making will still be yours so you might as well think through all of your business objectives carefully before picking-up the phone to your lawyer.

A big change came for Epicom when we began creating Intellectual Property (IP) that we wanted to protect.  Before this we only needed an attorney for the occasional contract modification or question brought up by a prospective customer.  But once we started creating IP, we needed an IP specialist and hiring one has turned out to be a smart decision.  We worked for several years using a couple of different independent attorneys who had great resumes and had left positions in big firms for the flexibility of solo practice.  Their rates were much lower, they were fun to work with, and they were able to provide us the billing flexibility that startups like ours need.  One of our attorneys reduced her rates by $50 per hour in exchange for us keeping a $2,000 balance on account with her.  This worked great for us because money was always on account for legal work and we got a great rate for a high-quality attorney.

Our IP attorney did a great job of educating me on the basics of intellection property and this turned out to be a smart investment.  The first few times we engaged her on a project, our IP attorney would write me long explanations justifying the recommendations she was making.  At first this seemed like overkill and I worried about how much this advice was costing.  But after a few projects I became much more knowledgeable and confident in my negotiating abilities.  As a result, I relied on our attorney less and was able to make more decisions on my own without her input.  This saved us a lot of money in the long run.

Epicom has recently moved from independent attorneys in solo practice to a small firm that specializes in helping startup and high growth companies, most of which are in the technology space.  They are more expensive than our independent attorneys, but they are very efficient and bring a variety of talents to the table.  As our company grows and our legal needs diversify I think this decision will prove to be a good one.

Have a story about your own experience hiring legal help?  Free free to share your experiences below.


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Planning Important Sales Calls

Last week I participated in a sales conference call with one of the sales reps at Epicom and his prospect, a large national company with a significant investment in one of the software products that Epicom resells, customizes, and supports.  It was a great opportunity for Epicom and in general the call went really well.  But afterward I sat down with Epicom’s rep and discussed strategy for the account.  During this meeting we realized that many things did not go as well as they could have during the call.

What Happened?

Epicom’s sales rep set-up a conference call to introduce Epicom, discuss the prospects needs, and see if their project was a fit for us.  As the account was large and referred by another longstanding Epicom client, I was invited to discuss Epicom as a company, our history, and our approach to projects.

We jumped on the call and everything went great.  The prospect seemed happy.  We explained our capabilities.  They explained their needs.  Everyone said nice things and we hung up the phone.

What Went Wrong?

When I sat down with Epicom’s rep to develop a strategy for this account, we realized that a number of things did not go so well on this call.  Among them:

  • Establishing goals and expectations for the meeting – Although we had a rough agenda for our call, we did not have a set of goals and expectations articulated before we talked to the prospect.  What was our purpose for this call?  What were we hoping to achieve?  What would be the measure of success? What would a successful call look like?
  • Identification of key players – We went around quickly and made introductions on both sides of the call but we never determined the roles, responsibilities, and contact information for each of the people on the call.
  • Identification of competitors – We left the call with a warm feeling that the prospect genuinely liked us and wanted to continue moving forward in the sales process.  But we never discussed other options the prospect is considering and we don’t know whether we have serious competition or not.
  • Timeframe – We learned a lot about what the prospect is trying to accomplish but we didn’t find out what their timeframe was for decision making and for implementation.
  • Decision making process – Although we walked away feeling good about the tone and outcome of the call, we did not know how the prospect would be moving forward with their decision making process.  Was one person responsible for making a decision?  A committee that would vote democratically?  A group of advisors who would make a recommendation to senior management?  We never asked.

A Better Approach

I think this situation is pretty common in sales, especially as companies move into more complex, consultative sales when they grow and move up market.  As sales become more complex, additional planning is needed to make each sales interaction worthwhile.  After working with Epicom’s rep to develop a plan for this account, we developed a sense of how the call should have gone.  Here’s what we determined:

Agenda and Introductions – Rather than reviewing a bullet list of discussion points and going around the table for quick introductions of each person on the call, we should have:

  • Developed a detailed agenda with specific planned outcomes, both for the prospect and for Epicom.
  • Identified to ourselves, prior to the call, what we wanted to get out of the call and what we needed to accomplish to consider the call a success.
  • Introduced each person on both sides of the call, making sure we got the name, title, contact information, and role of each person in the decision-making process.

Next steps – After discussing the customers project, explaining Epicom’s capabilities, and gaining credibility to complete the project, we should have focused more clearly on specific next steps.  We should have walked away from the call with at least the following information:

  • Timeframes – When is the prospect targeting a decision?  When would they like to have their project completed?
  • Decision-making process – How will the prospect go about making a decision?  Who is involved in this decision and what are their roles?  Who is the ultimate decision-maker?  What is the legal review process?  Who actually signs the contract?  Who are the decision influencers?
  • Competition – Which other companies and products is the prospect considering?  Have they met with other competitors?  What do they like and dislike about the competition relative to what they know of us so far?

Agreement to Proceed – In addition to understanding the next steps required to keep the sales process moving forward, we should have asked for the prospect whether there was any reason they could find that they would not pick Epicom as their vendor. Understanding that the prospect may not be ready to make a final decision and may need quite a bit more time for evaluation, our goal should have been to gain the prospects complicit agreement that they consider Epicom a top candidate with real potential to win their business rather than just another vendor being kept around to keep the buying process competitive.  I call this part of the sale the “intermediate close” and we’ll take about i more in a later blog post.

Lessons Learned

In a simple sale with only one or two decision makers, sales calls can be made with relatively little planning.  But when projects become bigger and decision-making processes more complex, there is a real need to plan each call out carefully.  Time with the prospect is precious.  Internal resources, like engineering time, or executive management time are also hard to come by and need to be used carefully.  Planning each call in detail and outlining the roles, responsibilities, and planned outcome of the call with each meeting participant before the meeting starts is critical to success.  Yet, that extra work makes sales reps less likely to do the necessary preparation and instead they often shoot from the hip, yielding less than ideal results.

How does your organization plan for complex sales calls?  Is there and formal process in place?  Have reps been trained on it? Have you measured the outcome to see if the planning work you are doing is yielding the better results you expected?  Feel free to leave your comments and ideas below.

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New Forrester Report on Governance of SaaS CRM Solutions

I was recently interviewed by Bill Band of Forrester Research for a report he wrote on governance of Software-as-a-Service CRM Solutions.  Bill has great insight into the CRM marketplace and I enjoyed working with him.  Bill and I did an webinar earlier this year on mobile CRM that featured USA FACT, a long time Epicom customer.  If you’d like to view a recording of the mobile CRM webinar, you can register here.

Here’s what Forrester says about their new SaaS CRM Governance report:

This report prescribes solution governance best practices for application development and delivery (AD&D) professionals who implement “cloud”customer relationship management (CRM) solutions. While organizations are increasingly adopting software-as-a-service (SaaS) CRM solutions, many have not adapted their governance processes and policies to get maximum value out of those solutions. Importantly, the move to the cloud will force organizations to reconsider governance that takes into account Agile development methodologies. This report defines SaaS CRM solution governance practices during each phase of the project life cycle — planning, implementation, and ongoing development — and includes best practices for managing cloud solution vendors.

To download a full version of the report, follow this link.

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The Basics of Sales Forecasting

One of the first areas of focus for companies with newly installed CRM systems is establishing a method for generating accurate sales forecasts. Regardless of the industry, accurate forecasts are a critical necessity for the well-managed firm. Sales forecasts allow manufacturing firms to anticipate production requirements and to predict inventory levels. Professional services firms rely on accurate sales forecasts to predict labor demand, make hiring decisions, and prioritize projects. All of these are essential tasks.

The problem is that in many industries sales are notoriously difficult to predict. Customers don’t buy when you want them do, their plans often change with little notice, and salespeople themselves may be ill-equipped to make accurate predictions of their own results. This creates the familiar tug-of-war between sales and operations. Operations wants and needs predictability while customer’s want and need buying flexibility.

But a well structured CRM system can go a long way toward improving these problems by providing more accurate forecasting metrics, and reinforcing a culture of discipline with regard to sales performance inside the organization.

This blog post will look at three different methods of forecasting using a CRM system. Our examples will use SugarCRM but many of the concepts and techniques used here can be duplicated using other CRM tools.

Pipeline Forecasting

The simplest method of forecasting sales is to use the data already contained in each salesperson’s opportunity pipeline. In SugarCRM, each new qualified sales opportunity is tracked by creating and updating an opportunity record. Data contained in this record includes the dollar value of the deal, the expected close date, the probability of sale, and the current stage of the opportunity in the overall sales process. Using only this data, a sales forecast can be constructed for any time period in the future (weekly, monthly, quarterly, annually) using the expected close date to filter and total the appropriate opportunities. Using the probability of close as a weighting factor, an expected value for the salesperson’s or the entire organization’s pipeline can be easily calculated by multiplying the value of each opportunity by the probability of close, and then summing the resulting values.

Basic pipeline forecasting works pretty well, mostly because it is easy to implement. However, there are tradeoffs with this method.


  • Easy for sales reps because they don’t have to take time to enter separate forecast information.
  • Forecasts are accurate all the time as long as sales reps are updating their pipeline with the most current information.


  • Reps often don’t keep opportunities up to date, lowering the value and accuracy of the forecast.
  • Probably of close is notoriously difficult to predict, making weighted averages and expected pipeline values inaccurate.
  • This method typically assumes that the further a deal has progressed through the sales process the higher the probability that it will close. This is not always the case.
  • No stake in the ground. Because the forecast changes constantly as opportunities are updated, it is hard to put a stake in the ground and commit to a firm number for the forecast period.

Despite these notable disadvantages, most organizations start their quest for accurate sales forecasts using basic pipeline forecasting. Reports and dashboards that filter opportunities by their expected close date are easy to create. Many organizations never move beyond this basic method of forecasting either because this method creates adequate forecast accuracy, or because they don’t want to take the time and expend the effort required to develop a more sophisticated forecasting methodology.

Formal Sales Forecasting

A second approach to forecasting adds a formal commitment by each salesperson to their results at the end of the forecast period. By asking salespeople to put a stake in the ground and commit to a result for the period, forecasts are taken more seriously and management is better able to determine what business will close and what business won’t close during the period. Sales compensation can also be tied to forecast accuracy using this method, further reinforcing a culture of discipline around forecasting.

At Epicom, we implemented this method with a simple enhancement to the Opportunity module in our instance of SugarCRM. We added a “Forecast” checkbox to the opportunity layout. At the beginning of each month, sales reps update their pipelines with the most accurate current data. Then they review each opportunity and decide whether to formally forecast the deal. Checking the forecast box on the opportunity record commits that deal to the reps forecast for the month. Reps are given a few days at the beginning of each month to update their pipelines and create their forecast. The formal forecast is then closed on the 5th business day of the month and a report is run to show all of the deals forecasted by each rep. This forecast is frozen and the rep’s performance is then measured against this initial forecast. As deals close throughout the month, each rep can see his performance as a percentage attainment of the monthly goal.

Sales Forecast Modules

SugarCRM contains a forecasting module that formalizes the sales forecasting process by providing reps with a method of adjusting the value of individual opportunities up or down based on best and worst case sales scenarios. Here’s how it works:

  1. Managers set-up sales forecast periods. These can be for any timeframe but are typically weekly, monthly, or quarterly. Quotas can be assigned to each salesperson for each forecast period.
  2. Salespeople select a forecast period within the forecast module and are presented with a list of opportunities with expected close dates that fall within the forecast period.
  3. Salespeople review each opportunity and then have the option to adjust the value of each deal based on the expected result. The forecast module provides entries for best-case, worst-case, and likely cast outcomes for each opportunity, allowing the salesperson to submit a forecast with several outcomes.
  4. Once each opportunity has been reviewed, the system totals the values for each salesperson and provides a best-case, worst case, and likely case total for the forecast period.
  5. The salesperson then commits the forecast by clicking a button after she is satisfied the numbers represent her desired forecast.
  6. Individual sales rep forecasts are rolled-up to supervising sales managers where managers make their forecast for the period. Rather than adjusting the outcome of each deal, managers can adjust the total forecast of each direct-report salesperson up or down as desired. Each manager’s team total is then calculated by the forecasting module and the manager then formally commits to the forecast by clicking the commit button.

Using this method, forecasts can be made for any time period and can be updated as frequently as needed. If a deal changes or gets cancelled, the rep can go back into the forecast module, update the forecast, and re-commit it as necessary. The module keeps a history of these forecast changes so that managers can see the difference in forecast values over time.

Because this reporting hierarchy can be built with any number of levels, forecasts can roll-up from sales reps to managers, directors, VP’s, and beyond. A sales forecast for the complete organization can generated regardless of the organizational complexity of the firm.

SugarCRM’s sales forecasting module provides an attractive level of detail and formality to the sales forecasting process. Pros and cons of this method include:


  • Allows managers to establish any forecasting period they like (e.g. weekly, monthly, quarterly)
  • Provides a mechanism for managers to assign quotas to sales reps.
  • Creates a formal forecasting process where sales reps can adjust expected sales numbers on a deal-by-deal basis based on their inside knowledge of the deal.


  • Time and energy. Using a sales forecasting module requires regular, concerted effort on the part of all salespeople and managers.  This discipline is difficult to maintain in many organizations.
  • Accuracy. Determining the expected value and close date of each deal is still a subjective process even with a formal forecasting module. Use of the module does not always increase the accuracy of the forecast despite the extra effort involved.

The Bottom Line

Because of the disadvantages of CRM-based forecasting modules, few Epicom customers use them.  We have found that this typically because the modules are not sophisticated enough to handle the complexity of the forecasting task, which often involves forecasts by product line, revenue type, or industry, not just an overall sales pipeline.  And even if the forecasting module is sophisticated, the time and effort to use it is usually not rewarded with a more accurate forecast.
At Epicom, we have settled on the simple “formal” forecast method outlined above, where individual deals are marked as either “in” or “out” for each forecast period.  This method encourages each rep to commit to a number he or she will deliver for the period, and creates a firm goal against which to measure monthly progress.  We keep things interesting each month by holding a forecast accuracy contest.  The person whose results come closest to his forecast is rewarded with a cash bonus, or a dinner out.  Its not expensive and it keeps everyone focused on the results we are targeting.
Do you have a unique method of forecasting sales in your organization?  A technique you have used to generate especially accurate forecasts?  Please feel free to share your thoughts below.
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SXSW Interactive Major Themes

It seems that each year at SXSW there are a handful of major themes, technology industry trends, or major product announcements that get the lion’s share of the attention.  In 2009 it was the introduction of FourSquare.  Two years earlier it was the then-recent introduction of Twitter that grabbed all the headlines and SXSW was a big part of Twitter gaining such rapid adoption.

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