The importance of contracts in small business cannot be overstated. As a small business owner it is easy to look past this simple fact. In fact, you’re probably questioning whether or not you should even spend time reading this.
First, drafting a contract takes time — time that could be spent doing other “more important” things, like business development or actually producing what you have previously sold, or your laundry.
Secondly, it can seem to undermine the mutual trust you have built. Early on in a business relationship, you have likely gone through a series of steps to win the trust of your potential client. These might include lunches, social events and in-depth conversations. All of these tactics help create a sense of camaraderie and trust. You may even find that you and your new prospect could potentially be good friends. If you have a co-dependent personality, you might even be thinking BEST friends! The excitement around this new relationship makes it is easy to overlook minor details when assembling your contract. Specifying things like hours, dollars and timelines can seem to counter this friendship you are nurturing.
In fact, a well-written contract is key to keeping your relationship on track. By spelling out in detail the services you will perform or product you will deliver, you set expectations for your relationship. You know exactly what it is you have promised and the client knows exactly what and when they are required to pay for it.
Deliver exactly as the contract reads and your relationship strengthens. Simple! The best part is that if you decide to go above and beyond the contract, it is apparent to everyone involved that you have done just that. Your goodwill will be recognized, further strengthening your relationship. You may even come across as a God to them. Not a serious one — more of a metaphorical one.
A contract creates a common vision for you and your client. Without a contract, no matter how you describe the work, the client will almost always have a different idea of what it is you will deliver.
A good contract should accurately describe the project at hand and the deliverables. It should outline the fee structure and schedule for payment. It should also outline what happens if the project is cancelled mid-stream.
Trust me, a solid contract is the first step toward a lasting client relationship.
