WHAT CONTRACTS YOU NEED IN YOUR BUSINESS.
Firstly, congratulations on taking an idea and turning it into your business.
The early stages of setting up your business can be so exciting and overwhelming at the same time. You have probably been working on business plans, branding, websites, marketing and a whole lot more over the past few months.
One thing that many people acknowledge is important, but fail to get done is putting appropriate contracts in place. Talking about the legal side of your business may be daunting or even boring but it is something you really should prioritize.
I want to share a story with you…
Charlotte is a graphic designer, who landed a job with a large design agency in California straight out of college. She learned a lot and had the opportunity to work on some great projects. However, after two years in the role, she started to get annoyed by all the lack of autonomy and the formalities that went with working for a large company.
At the beginning of her third year, she decided that she would set up her own agency. She wanted to the freedom to work on the type of projects she enjoyed most. Charlotte worked hard to get the business off the ground, she did all of the branding and website work herself and entered the world of entrepreneurialism with a spring in her step.
After a few months of reaching out to people and marketing her services, she started to get inquiries and landed her first paying client.
Bingo! She was so excited that everything was really coming together. She couldn’t wait to start working with this client.
She arranged for the client to transfer her fee via Paypal and told the client that she would get started on producing a logo for her as soon as the money was received. Charlotte completed the work within two days and was very happy with it as it really reflected what the client said that they wanted.
But, the client didn’t share the same view.
The client requested some amendments. Charlotte completed the amendments promptly, only to have the client request changes another 3 times.
Charlotte was starting to get irritated but felt obliged to do the changes as she had already taken payment.
She had not discussed or agreed to any terms with this client before she started working on the project.
She had not anticipated spending this much time on this project and it was starting to cost her money as she was having to delay starting work on other projects.
Eventually, she delivered a design that the client was happy with but both she and the client were frustrated and disappointed by the working relationship. This was not a good start to Charlotte’s new business.
This whole scenario could have been avoided if Charlotte set out the terms for working with her right at the beginning of the working relationship.
Charlotte is not alone, failing to get terms of business in place is a common mistake made by many entrepreneurs.
or some people, the issue faced is worse than numerous edits on a project, it could be a lawsuit or not getting paid for work completed.
It is understandable that people want to spend time on delivering the service or product they set up business to share but skipping the step of recording your intentions and expectations can be very costly in the long run.
Relationships can break down and things can turn ugly, so to avoid any “he said”, “she said” situations, it is important for you to get contracts in place.
the basic contracts you need
There are a number of contracts that you may need to put in place as your business grows, however, to start off with just focus on getting the following key foundational documents:
Terms of Business
You need to have a document which sets out your terms of business to use with clients. This will include information such as your rates, payment terms, refund policies, timeframes for completing projects, termination rights, intellectual property ownership.
You may decide to hire people to help you on projects. It is important to get an agreement in place which clearly sets out the scope of the work that the contractor will carry out, the fee that you will pay them, and a clause assuring that they will keep anything that learn about your business confidential.
When people visit your website, you need to make clear what they can and can’t do with the information they find on your site. You also need to let them know how you will be using the personal information that they may share with you on their site.
If you do not have the budget to instruct a lawyer, you can write a basic contract yourself - the aim is for both parties to have clarity around the working relationship and what they each can expect.
Janine Esbrand is the founder of LightBOX Coaching which helps lawyers and mums to build careers that they love whilst raising a family. She is also a corporate / commercial lawyer with over 10 years experience working within the legal sector at law firms and companies in the UK and US.