Not every entrepreneur is comfortable negotiating. And this is harder still if you have no prior experience in contract creation. At the same time, it is difficult (and maybe impossible) to operate a small business without negotiating agreements with employees, vendors, customers, and investors. Today, we share the basics every small business owner needs to know if you're a beginner at contracts.
Contracts Are Critical to Protecting Your Business
According to Bremer Whyte, contracts and the laws governing them have profound effects that could impact the survival of your business. A properly drafted agreement helps solidify the rights of all the parties involved. It can ensure business success down the line. For example, verbal contracts are problematic because things change, and disputes can often arise, even if something is agreed on. On the other hand, a legally enforceable contract provides much-needed legal protection, so they are crucial for every small business.
Understanding the Contract Process
There is no set time frame for the contract process, and they typically just take as long as it is required for the two parties to agree to the terms. However, most contract negotiations follow the same process, which is:
Contract sample: The process starts with sharing a baseline contract containing the documents' basic terms and agreements. The parties then read through everything outlined.
Discuss and negotiate: Once the parties have read through the contract, they will each have the chance to discuss it and make any changes. This stage typically involves some back and forth to arrive at an agreement.
Finalization: Once all parties are happy, the contract is finalized, which involves approval and signing.
Contract Creation Tips
The best tip for creating contracts is to go over the details with a fine-toothed comb. Spell out your objectives in particular and the rights and obligations of each party. This will speed up the process, as all parties will be on the same page. In addition, you should include a contingency clause that helps you agree on how to resolve any disputes or conflicts.
When creating contracts, also look for tools that help simplify the process. For example, a document editor can help you quickly edit and modify the agreement. In contrast, editable presentation software will help you work through the contract in real time. In addition, use accounting software to cover your business's financial health when negotiating contracts and get real-time insights on cash flow.
Last but not least, adding a business logo to your contracts is a good idea because it gives them an additional feeling of refinement and professionalism. If you don't have a business logo yet, don't panic. You can actually create one for free using a logo maker tool, then add it to your website, contracts, business cards, etc.
Contract Negotiation Tips
The negotiation process starts before the contract is formed. It will be critical to understanding what you're willing to compromise on before the talks to control the negotiation. This will give you leverage down the line as you will be clear about your goals. In addition, try to understand the contract from the other party's perspective. You don't want to be too unrealistic with your demands, as this can reduce trust in the relationship. Take your time with the process, as rushing through it can open you up to risks. Lastly, work with a lawyer to ensure that your interests are fully covered in the contract and draft a mutually-advantageous document.
Contracts and Invoices
As a business owner, one of the most important contracts you can negotiate is the terms of payment, and your invoices are legal documentation of those terms. Having professional, representative invoices are important for both you and your customers because they establish a mutual record of sales. When starting out, investing in the software necessary to do invoicing can be costly, but you can create customized invoices with online tools. By customizing a template with your company's logo and colors, you can provide your customers with high-quality documentation of sales even when your business is just getting started.
A contract defines a relationship between two parties. Creating this document requires a lot of time and effort, as it can build relationships and avoid risk and conflicts down the line. Be sure to use the strategies mentioned above, so you're running a smooth negotiation to successfully create your contracts!
If you're a small business owner needing secretarial services or administrative support, contact Albright Administration today to schedule a complimentary 30-minute no-obligation call to learn about how they can help your business succeed.
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Written by Amy Collett
Any is the creator of Biz Well [http://bizwell.org/], a website that helps professionals and entrepreneurs build and strengthen their personal brand. When she isn’t helping clients boost their careers or businesses, she enjoys coaching her daughter’s soccer team and training to become a yoga instructor.