The marketing folks at HRsmart must have been psyched when they issued a press release in August announcing that the small Texas company had been tapped by Metro-Goldwyn-Mayer, the movie studio, as its human resources software vendor. Landing a marquee customer confers upon a small business a sense of legitimacy well beyond what a clever slogan or thoughtful sales pitch can supply. But as HRsmart discovered, large corporations are pretty protective of how their name is used. And so it was that HRsmart found itself issuing another release a month later--this one, a retraction stating that, in fact, MGM was not a client.

How could this happen? HRsmart is unwilling to discuss the matter--in an e-mail to Inc., spokesperson Brian Bagnall writes that HRsmart "will not speak publicly to anyone about our partnerships or customers without their consent." Fair enough.

What appears to have happened is that HRsmart tried to piggyback off a deal landed by a onetime partner-- a company called HRLogix. HRLogix spokesperson David Johndrow says his company bought the rights to some software from HRsmart, then sold it along with its services to MGM/Mirage, the Las Vegas casino company. HRsmart apparently got word of the deal and issued the release misstating that MGM, the studio, was using the software it developed. HRLogix immediately requested that it set the record straight. "It was a big mess," says Johndrow.

These kinds of missteps can be avoided, says Babson College professor Srinivasa Rangan, who recommends that small companies double-check all press releases with the corporate clients they mention. It's PR 101--often overlooked by entrepreneurs who make decisions without a lot of outside advice.