Business Contract Basics
Contracts are what bind small businesses to their vendors, employees, customers, and partners. These legal documents put certain protections into place and set parameters for how a professional relationship will work. If you are a small business owner getting ready to enter into your first contract, it pays to understand how to create and negotiate these agreements. Not having this skill can cause huge headaches and cost you money as you try to grow.
Read on for some tips and advice from https://kcurryva.co.uk.
Why Are Contracts Important?
Contracts are crucial to businesses and offer a layer of financial protection against losses. As Thomas Paschos & Associates explains, a broken contract can make it difficult for you as a business to pay your bills. However, having well-written and clear terms reduces the chances that you’ll spend your time and energy chasing broken promises. Contracts also work to keep you accountable in all areas of your business.
Doing Your Diligence
The first step of drafting any contract is to have all pertinent information handy ahead of time. This includes knowing who you are negotiating with. In today’s digitally connected world, you can simply take to the search engines (usually, Google) or text a friend or colleague to scour for insight that might help you draft and negotiate a more beneficial contract.
Another important step to take before writing a contract is to understand your business’s health. The more you know about your business’s strengths and weaknesses, the better you’ll be able to negotiate something more beneficial to you.
Information Included in a Contract
A basic contract includes wording that leaves no doubt about what’s expected between you and your partner/customer/vendor. Still using the construction example above, your contract may lay out pricing, a timeline, and who is responsible for obtaining applicable permits. Once you start with the basics, you can make changes as you go.
A quick tip here: make your contract shareable with your attorney or current business partners. This way, if anyone sees changes that need to be made, you can use a PDF editing tool to make these edits and then redistribute the documents in its entirety. Even more convenient, a Google Doc can quickly be converted to a PDF, and then a PDF editor allows you to add your own sticky notes, drawings, and highlights.
Negotiating Tips
- Create unique sections that outline specific aspects of your agreement
- Keep things simple
- Clearly define why you are entering the contract in the first place
- Ask lots of questions to gain a better understanding of the other party’s motives
- Leave emotions out of the equation
- Be persistent – this is also a great life tip to help you get what you want in any situation
- Don’t rush the process. Remember, as cost-reduction consulting firm Schooley Mitchell explains, being in a hurry isn’t always the best course of action.
- Always have an attorney review changes before making an official agreement, no matter how small these might appear
Ultimately, your business contracts will be unique to your firm and to each contract written. These are an important business tool that help everyone clearly understand expectations and the consequences of not meeting them. Remember to do your due diligence, include appropriate wording and information, use a PDF editor to update and share documents, and know what it takes for negotiation.
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Article Written By Marissa Perez