If you are a business owner, odds are good you understand the importance of contracts. They outline deliverables, expectations, timelines, payment schedules, retainers, and so much more. They cover a plethora of information and form the foundation for the working relationship between you and your clients. Ensuring you begin your working relationships with a strong foundation not only protects you, your company, and everyone’s information, it also ensures your working relationships are clearly defined and everyone is well informed and on the same page. Including the necessary legal lingo, like terms and conditions, must not be overlooked, but these terms can be written in such a manner that all can be understood and clearly interpreted.
Important sections to include in a contract
- Time Period
- Payment Schedule (*Be sure to address any penalties incurred if payments are missed*)
- Liability, Governing Law
- Acknowledgement Page (including a place for both parties to sign/date)
An important note on pricing your services
When considering how you will price your services to clients, take time to consider all the costs you will incur during the length of the relationship to guarantee your retainer provides cost coverage AND profit margin. This will also help you understand your profit margin across all clients and provide you with a more global view of your finances. Further into your relationship, this will also allow you to look back and compare your actual costs to your estimated costs and will help you learn how to better guesstimate your expenses for future contracts.
Once you have created your contract template and included the above information (of course, information will change per client – objectives/deliverables, pricing, timeline, etc., but the overall template will remain the same), to ensure it is legally sound, be sure to have it professionally reviewed before sending it to a potential client. The repercussions of DIY lawyering can be very costly!
Tips on managing the process
Once both parties have agreed to the terms and signed the contract, make the contract actionable! It is imperative you establish a system to manage your objectives and deliverables, and the agreed-upon timeline, if applicable. Don’t leave the deliverables buried in a Word doc, saved in a folder somewhere on your computer. Take the objectives, deliverables, and timeline from stagnant to accountable utilizing a task management system where you can input the steps necessary to complete the work. Additionally, if you are a service-based business and you’re not tracking or estimating the time it takes to complete the work along the way, you are missing an important step! How will you know if the time you estimated when creating the contract compares to the actual time taken to complete the work if you don’t track that time? If you’d like to streamline this process, there are many time-tracking apps to make this easier for you. Having this information recorded will allow you to compare your estimated time with the actual time spent on the client. You might just find that those little extras you agreed to in negotiation were more costly than you anticipated. This will allow you to take your actual earnings from this client and adjust your costs for the next client.
Of course, the final goal of creating a contract is to ensure you meet or even exceed your clients’ expectations while protecting your company. If this system feels too daunting and overwhelming for you to create, plan, and manage yourself, perhaps you are in need of some expert assistance. We hear you! With years of serving B2B service-based entrepreneurs, we bring best practices and proven processes right to your door…er…well…right to your Zoom call. We would love to partner with you to help your business succeed: https://remotecoo.com/strategy.