3 Reasons You Need Contracts In Your Small Business

Running a business takes more than just skills and talents. It takes a ton of systems to help keep your business running like a well oiled machine. You need systems for you accounting department, of course; systems for your administrative details; systems for your operations and systems for marketing.

One of the most important systems you need to create is a system for securing your clients. This system will start from the point when you meet a prospective client to the point when they sign the contract and work begins. You would be surprised at how many clients don’t get a signed contract from a client or from a subcontractor. A contract is essential in making sure there is no ambiguity in the agreed upon terms. When words are spoken they are often misconstrued. But when they are in black and white there is no mistaken what was said.

Here are 3 key reasons why you should have contracts incorporated in your business systems.

Protect your rights. Nowadays people are quick to sue someone. Lawsuits are created for the simplest of issues. So to ensure that you are protected you need to have within your contract a clause that states what things you will not be liable for. You should even include the state by which laws you will abide, your home state of course, especially if you are working with clients who are in another jurisdiction. You don’t want to get dinged for a law in another state that isn’t in your home state.

Establish the scope of the engagement. Another way to protect your rights is to state precisely what services you will perform. Clients are famous for trying to squeeze in other tasks that are not within the scope of your agreement. Hey we all have done it at some point in time. While the plumber is here fixing the clog, maybe he can fix that running toilet too. You get my point? You don’t want to get sucked into helping a client with a bunch of other things that will, one – prevent you from completing the tasks you are suppose to do and two – leave you feeling overwhelmed when you finish working with them for the day.

Secures payment. Now this one is a BIGGY and probably the main reason why most people create contracts for their services. You not only want to be sure you get paid but you want to be sure you get paid in full and how you will receive that payment. With a contract the risk of not getting paid increases tremendously, which later leads to lawsuits.

What reasons do you think are most important for establishing a contract for your services or the services of vendors?

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