What New Business Owners Should Know About Contracts
Are you starting a new business that involves negotiating with other individuals or corporations? Whether you're opening a brick-and-mortar flower shop or making a deal with a new SEO strategist, the most crucial step you could take right now is solidifying your understanding of business contracts. Contracts are one of the cornerstones of legal, stress-free business transactions.
Why Are Business Contracts Important?
Business contracts represent an agreement between two or more parties, but these documents are more than terms on a piece of paper. These contracts represent good faith between you and your new client, customer, or partner.
Contracts are also great reference documents for business owners who are working on lengthy or complicated projects. You and your client are able to refer to your contract to better understand the terms and refresh your memory on what you've agreed to throughout the time you work together.
What You Should Know as a Beginner
Don't make the mistake of assuming that you don't need a written contract, or that by asking your client to sign a contract, you're sending the message that you don't trust them. You may run into the opposite problem: If your client has been in the field for a long time, he or she may be concerned about your transaction if you don't spend time creating a legal document that represents your work together. Consider the three points below before making one of your own.
1. Creating Contracts
During the creation phase, you (and any business partners) will sit down and outline the terms of the deal, sale, or partnership with your client. Include basic information such as the date, the parties involved, and the terms of the deal to start. Reference your field's guidelines or ask an attorney if you need help finding legal information specific to your industry.
2. Negotiating Contracts
What's your end goal for your partnership with this person (or business)? According to legal experts, the negotiation phase will be a smoother ride if you can prioritize your objectives. Before talking to your client, write down a few things that you want as well as a few you are not willing to compromise on.
It's important not to rush through negotiation and to have a solid understanding of your company's accounting and finances. The best accounting software will allow you to see all of your finances simultaneously on one central platform. If you feel unsure about any budgets, clauses, or terms, then ask your client for clarification.
If at any point you feel that the partnership isn't going to work out, speak up. You don't want to sign a contract with someone you don't respect or trust.
3. Modifying Contracts
Ensuring that both you and your client are on the same page when it comes to amending or modifying the contract is crucial to its success. Tables and graphs can be presented remotely with the aid of helpful software and PDF documents.
Make sure not to delete old drafts of your contact. Use a free online tool to extract PDF pages if you need to create a new PDF out of existing documents and only modify the new one.
Don't worry about not knowing everything about creating these documents at this point. Use templates, accounting software, and online tools that are readily available to you now to begin creating airtight business contracts as soon as you need them — and be sure to ask an attorney for additional legal help if you need it.
New to the small business space?
Start with the Small Business Toolkit below, then check out Zenbusiness.com for more information: