Choosing the Right Vendor: Avoiding Painful Lessons (Like My $500,000 Mistake)
When you’re building an emerging brand, choosing the right vendor isn’t just a task on your to-do list—it’s a decision that can either accelerate your growth or cost you dearly. I’ve learned this the hard way.
I’ll never forget the season in my own business when I relied too heavily on an executive to review a hundred-page contract with a vendor. I assumed he had read it thoroughly, understood it fully, and that I didn’t need to dig in myself. The truth? I was being lazy. I didn’t want to wade through the legal jargon, and I trusted that if anything was wrong, it would be caught.
It wasn’t.
In fact, that contract—and two more that followed—ended up costing my company over half a million dollars in lost revenue. Worse yet, the vendor relationship should have been terminated well before I finally pulled the plug. But I waited. I rationalized. I didn’t want to start over or deal with the mess. And that hesitation cost me.
That experience taught me that vendor decisions aren’t about convenience. They’re strategic. And I’m passionate about helping other founders—like the clients I coach today—avoid the pain and suffering I went through.
Recently, one of my clients—an emerging franchisor—was preparing to sign with a Franchise Sales Organization (FSO). Before she finalized anything, I asked her to send me the contract. I’m so glad she did. After reading through it with the eyes of someone who’s been burned before, I found 8–10 areas that raised red flags. Together, we slowed things down, reevaluated, and prepared to negotiate.
That moment reminded me just how many founders are one signature away from making a very expensive mistake—and how important it is to share these lessons before the damage is done.
Here’s the advice I give my clients, and the guiding principles I now live by when it comes to choosing vendors wisely:
1. Always Read the Contract—Yes, You Personally
Even if your CFO or COO reviews it, you as the founder or CEO need to read the contract yourself. Don’t assume others will catch the landmines. Your future self will thank you.
Bonus tip: Require two signatures on any major vendor agreement (e.g., CEO and CFO). It slows down the process just enough to prevent costly oversights.
2. Have a Business Attorney Review It Too
Standard doesn’t mean favorable. Some vendors will say, “This is boilerplate language,” or “No one ever negotiates this.” Don’t buy it. Every vendor relationship is negotiable—and a good attorney can spot things you might miss, like automatic renewal clauses, termination penalties, or revenue share traps.
3. Ask for—and Call—At Least Five References
Yes, five. Ask for a mix of current and former clients. And be bold enough to say:
“Could I speak to a client who wasn’t fully satisfied?”
You’ll learn just as much—if not more—from the clients who walked away than from the raving fans.
4. Test for Core Values Alignment
A vendor is not just providing a service—they're representing your brand. Have you shared your core values with them? Do theirs align? If they’re dismissive or indifferent, take that as a cue. Misalignment on values often leads to friction later. Check out this Forbes article on The 4 C’s when Choosing a Vendor.
5. Use the “Dinner Test”
Would you feel proud to introduce this vendor to your friends or family? Would you want to have them over for dinner? If the answer is “no,” they’re probably not someone you want on your team—because vendors are part of your team.
6. Vet the People, Not Just the Company
A fancy brand name doesn’t matter if the person assigned to your account lacks follow-through or integrity. Ask: “Who will I actually be working with?” and make sure you trust—and like—that person.
7. Don’t Ignore Red Flags
In my situation, there were signs the vendor wasn’t delivering. But I stayed too long, hoping things would get better. Don’t make that mistake. If you’re constantly frustrated, repeating yourself, or getting vague responses—it’s time to rethink the relationship.
8. Slow Down. Don’t Let Urgency Drive the Decision
Some vendors will push you to sign quickly with phrases like “This pricing expires Friday” or “We only have one more spot.” Take a breath. Urgency is their problem—not yours. Smart decisions are rarely rushed.
9. Define Deliverables and Accountability Up Front
Ambiguity breeds disappointment. Insist on clear deliverables, timelines, and what happens if they miss the mark. Accountability shouldn’t be optional—it should be contractual. Entrepreneur has a great article on 4 keys to choosing the right vendor.
10. Know That It’s Okay to Walk Away
Just because you had three calls and like their Instagram doesn’t mean you owe them your business. And if something feels off—even if you can’t quite articulate why—trust your gut. It’s easier to pause now than to unwind a bad contract later.
Final Thoughts
You don’t need to learn every vendor lesson the hard (and expensive) way. Let mine be enough. Vendor partnerships can be powerful when done right—but only if you protect your business, your brand, and your future in the process.
As a founder, your job isn’t just to make decisions—it’s to make decisions that build a legacy. Choose your vendors like your legacy depends on it.
Because in many ways, it does.
Shine Lesson Learned:
If you don’t read the contract, you might end up paying for someone else’s mistake.
Vendor decisions are leadership decisions. Slow down, ask the hard questions, and protect the business you’ve worked so hard to build.
Shine On, Shannon
