Wednesday, April 7, 2010

5 Ways to Improve Your Contracts

Every small business owner should have a good handle on what is in each of their contracts and should play some role in their development.  The reason for this is that contracts can play an important role in shaping the nature of the business that is performed.  Here are five “c’s” to focus on while developing your contracts.  Feel free to add any suggestions that you may have in the comments:

1) Clarity

Make sure that you and whomever you are contracting with understand the nature and the terms of the contract.  While it is relatively simple these days to purchase or download template contracts for your small business, it does not necessarily mean that they will be a clear outline of what the two parties are planning on doing.  For a contract to be truly effective, it needs to be clear.

2) Conversation

Take the time to discuss with the necessary parties what everyone thinks their role and others’ roles are in the agreement.  A contract, in essence, is the written summation of what the parties agree their roles and responsibilities are.  Talk about it.  Negotiate it.  Make sure everyone understands what they should do and what others expect.

3) Consistency

Contracts are much easier to manage if you establish a level of consistency in each transaction.  While each deal is different, there are many similarities from deal to deal.  The more consistency you can create, the easier your job is.

4) Cooperation

Too many people feel like business needs to be dog-eat-dog.  Real, meaningful business is about relationships.  Work hard to establish those relationships and then use any agreement to maintain that.  Work together to build consensus on what the business relationship will be.  Create opportunities to succeed and be reasonable with mistakes.  We all make them.

5) Cohesiveness

At the end of the day, it is important to make sure that your agreements work together.  This can mean across deals (duties and responsibilities in one contract should not conflict with duties and responsibilities in another contract) as well as within a specific contract.  Make sure that there is harmony in the work that you are doing and there is less likelihood of difficulty.

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