Starting a business is an exciting time, but it can also be overwhelming. There are so many things to think about, from marketing to accounting to legal matters. One area that is often overlooked is contracts.
Contracts are essential for any business, but they can be especially important for small or startup businesses. That's because these businesses are often at a disadvantage when it comes to negotiating with larger companies. A well-written contract can help level the playing field and protect your business's interests.
Unfortunately, many small or startup businesses make common contracting mistakes. These mistakes can cost you time, money, and even your business. Here are 10 of the most common contracting mistakes to avoid:
- Not having a contract. This is perhaps the most common contracting mistake. Many small or startup businesses think that they can get away with doing business on a handshake. However, this is a risky proposition. If there is no contract, there is no way to enforce the terms of the agreement. This could lead to disputes, delays, and even legal action.
- Not using a lawyer. While you may be able to find templates for contracts online, it's important to have a lawyer review any contract before you sign it. A lawyer can help you understand the terms of the contract and make sure that they are fair to your business.
- Not negotiating the terms of the contract. Don't just accept the terms of a contract as they are written. Take the time to negotiate the terms to make sure that they are in your best interests. This includes things like price, payment terms, and delivery dates.
- Not getting everything in writing. Even if you have a verbal agreement with someone, it's important to get it in writing. This will help to avoid disputes down the road.
- Not reviewing the contract before you sign it. Take the time to read the contract carefully before you sign it. Make sure that you understand all of the terms and conditions. If you don't understand something, ask for clarification.
- Not keeping a copy of the contract. Once you have signed a contract, make sure to keep a copy of it. This will come in handy if there is ever a dispute.
- Not updating the contract. Your business may change over time, so it's important to update your contracts accordingly. This includes things like your address, contact information, and pricing.
- Not enforcing the terms of the contract. If the other party breaches the contract, don't be afraid to take action. This may involve filing a lawsuit or taking other legal steps.
- Not working with a reputable company. When you are working with a company, make sure that they are reputable. Do some research to make sure that they have a good track record.
- Not getting insurance. There are a number of insurance policies that can protect your business in the event of a contract dispute. These policies can include things like general liability insurance and business interruption insurance.
By avoiding these common contracting mistakes, you can protect your business and ensure that your contracts are fair and enforceable.