Contracts: what are they and why do you need them?

This seems like a taboo word that new business owners (especially) shy away from because they fear that they will intimidate and potentially lose clients just by merely bringing up the topic of a contract. In my experience, it feels worse to do work for a client who doesn't pay you than to explain to a new client the importance and protection that a contract or agreement offers to both parties.

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As a new or existing business owner, I understand why you may feel insecure about or shy away from using contracts. You may feel that potential clients will be intimidated by the length and wording that many formal contracts have used over the last 20+ years. This presents a challenge with the potential outcome being the loss of a new customer or project.
Today, I want to discuss an alternative - instead of avoiding a resource that is meant to protect you and your business, I want you to overcome this challenge all together by discussing the option to customize your own contract to fit your needs and expectations.

First, I want and need you to understand that contracts and service agreements are an important step when creating new partnerships, starting new projects and hiring new staff. These documents clearly lay out the guidelines and expectations negotiated by you (the business owner) and your client before an agreement is made and operations start.

Next, contracts come in handy when outlining project details, start and end dates, payment schedule and method, as well as liability and resource management. It is your lifeline that protects you and your business. Ensure that all the appropriate details are included and discussed/negotiated between both parties.

Third, when drafting a contract or service agreement, I encourage you to contact and work with the proper experts - a business or corporate lawyer. Their knowledge and assistance is beneficial; plus, this is their job. They know what wording to use, how to format and structure the document, and all the little details that make a contract stand up in court (if the situation arises).

Fourth, there will be many of you who choose not to work with a lawyer or do not have the resources to acquire one to draft your contract. There are some great online resources to assist you - ensure you use templates or resources that include wording related to your country, province and industry. Also, do not just re-use someone else's contract. Make appropriate changes to reflect your business, the project guidelines, liability, etc. 
A good starting point for Canadian businesses is Law Depot.

Finally, when reviewing your contract, make sure that you read it from start to finish ensuring that you understand it. Today, it is recommended that you use plain English, when appropriate, to explain your intentions and expectations. Documents that use too much ‘legalese’ wording can confuse or frustrate potential clients or staff. Keep it clear and concise.

Food for Thought: Many great relationships start with a good conversation and solid handshake. Unfortunately, a handshake or verbal agreement is hard to ‘prove’ in a court of law when a client doesn’t pay you on time, or at all.

If you have any questions, or would like assistance drafting a contract or service agreement, connect with me at jodi@wordstock.ca