However tiny your business, it pays to put contracts in place early. As soon as you start working with other people, your company’s success depends on them.
For example, you open a small store selling coffee and cakes and take on a part-time employee to help on Saturday when it gets busy. If they do not show up, it will leave you understaffed. When clients come in and have to wait a long time for attention, they may get grumpy or leave. Your reputation will suffer, and so will your profits. A similar thing could happen if your coffee supplier fails to deliver each Friday as agreed. Customers will go elsewhere if you have run out of beans, and they might post a negative review on the web. Tying your workers and supplier to contracts makes your expectations clear.
Contracts protect you from misunderstandings
Think back over the conversations you have had where one of you misunderstood the other. Perhaps your spouse said the party started at 7 p.m., but you heard 8 p.m. It might not have been a big deal, but if you were a caterer for a wedding party and turned up an hour late, it would have been. Putting your business agreements in writing avoids verbal misunderstandings.
Here are some things to include in your contracts that can help you deal with issues:
- What is required of both parties?
- What are the deadlines?
- What if one party breaches the contract?
- How long is the arrangement for?
- How can you end the agreement early?
Some contracts will be simpler than others to write. Yet, whether they are one page or 100 pages, they need to be accurate. They need to comply with all relevant laws and cover all eventualities. Contracts are legally binding, so it pays to ensure they fit their purpose.