Although most new and small business owners have heard about the importance of written agreements with co-owners, service providers, contractors, and clients, many elect not to bother with them until they have learned the hard way about the importance of establishing clear rules of engagement. Any successful business operation requires all parties to understand each side’s rights and duties and how each other will be held accountable when someone fails to perform. Verbal agreements simply don’t cut it. They certainly don’t hold up in court. This is why written agreements are an integral part of any successful business.
Why Business Owners May Have An Aversion To Attorneys
Yes, it does take time and money to have contracts properly prepared. In the beginning, many small business owners understandably have an aversion to spending both. Likewise, many business owners have a not unwarranted aversion to attorneys, believing an attorney’s office is where good deals go to die. This reputation is based when there is a failure to communicate clearly between client and attorney. This makes the choice of an attorney more important than ever. An attorney who understands the needs of small business owners and can communicate clearly is of inestimable value.
Clear Communication The Key To All Agreements Verbal And Written
Most attorneys are trained to anticipate conflicts before they arise and protect clients from these hidden conflicts. Entrepreneurial attorneys, who understand business growth and the need to find “win-win” solutions rather than focusing only on problems, do exist. But, until a business owner is face-to-face with an unanticipated lawsuit or other legal problem, you may still want a “do it yourself” approach to protecting your business with written agreements.
Seven Tips For More Effective Written Agreements
For those of you who insist on doing it your way, I offer the following tips for creating more effective agreements:
- First and foremost, every business will benefit from having clearly written agreements with business partners, employees and contractors, clients, and anyone else playing a significant or recurring role in business operations.
- Secondly, be as specific and clear in writing the agreement about each side’s rights and duties.
- Every agreement needs to clearly identify who, what (and the financial details involved in delivering the “what”), where, when, why/the parties’ intent in entering the agreement and the remedies available if one side breaches, and the how of those remedies. Consider whether either party must maintain insurance policies or guarantee a certain level of service or qualifications of service providers.
- To identify the variety and content of appropriate agreements, model yourself after a larger business in your industry, and research what agreements they use. You might be able to adapt their agreements for your use.
- Clearly state the exit or termination strategy.
- Include a dispute resolution provision.
- All parties who have obligations in the agreement should sign and date the agreement. They should specify whether they’re entering the agreement in an individual capacity or as a representative of a business. Agreements do not usually need to be notarized except for agreements that should be recorded in public records.
An Attorney Business Coach For Business Owners Who Don’t Want To Go It Alone
Over the years in my practice as an attorney I’ve helped so many fledgling entrepreneurs see their way through the unexpected legal issues they’ve come up against that I decided to start coaching people starting small businesses. My business is helping people who want to evolve their hobby into a small business or have already started a business. I help my clients understand the legal risks before they happen and how to either avoid lawsuits or to understand that there are solutions to problems that may not be readily apparent to them.
Being in agreement with your own dreams is the first step in any business. If you want to make sure you are on solid ground so that you and your business can grow through the endeavor, let’s meet. Together, we’ll make sure that your business has a strong legal foundation and a proper business plan so you can overcome the inevitable challenges and survive the business rollercoaster.