You’re an entrepreneur. You’re deal-focused. You’ve got your eye on the prize, and you can’t be bothered with unnecessary details. You are driven by the desire to get things done.
So when you establish a relationship with a partner, a supplier, an employee, or a client, it’s easy enough to imagine you can skim over the details for the sake of speed and ease. “We’ve agreed on the big and obvious issues, so we’re good.” You rationalize that turning your negotiated agreement into a written contract will slow things down. You’ll look like you lack faith or confidence. After all, everybody understands their respective expectations and obligations, right?
Wrong. With absolute certainty, I can predict for you a future that will not perfectly match the one you imagined. Success, failure, shifting loyalties, and faulty (or selective) memories can all wreak havoc on your original intentions. Parties that are amenable at the start will want to vary the terms or try to take advantage of ambiguities as time goes by.
There is no more basic principle of good business than to create and sign a contract with the parties that make your business possible. There is no better way to inject a measure of certainty into your business dealings than by putting them in writing. Written agreements can absolutely reduce the chances of unforeseen harm. They needn’t necessarily be complex book-length documents. If you have similar relationships with a number of parties such as subcontractors, carefully constructed template agreements can be adapted again and again.
Contracts establish trust. It’s a mistake to think of written agreements only as documents intended to prevent bad behavior, though that is how many people perceive them. A good contract signals that you, as a conscientious business owner, intend to establish a clearly defined relationship that will serve the mutual interests of all parties.
Contracts simplify relationships. The best business relationships grow out of clearly defined expectations. The process of discussing a contract and negotiating terms lays all cards on the table. It distills your conversations, cocktail-napkin brainstorms and business interests into words. Clarity reduces the odds of misunderstandings, and it is the bedrock of your interactions if disagreements do arise.
Contracts save your business hassle and money. At some point, someone will question some aspect of the relationship. It’s as likely to be you as the other party to one of your contracts. When that happens, the upfront costs of executing a contract can pay for themselves in a hurry. A well-constructed agreement can prevent litigation. If a disagreement does happen, it provides the basis for your case. It has the power to prevent hassles and minimize the financial resources you invest in litigation.
I invite you to consider your business. Do you have your most important relationships down in writing? Always remember that your actions today will determine your future with the other businesses and people essential to your success. If you find yourself engaging contractors and subcontractors, hiring executive personnel, or working with other professionals to advance your business interests, call me to discuss how we can implement contracts to meet your needs and mitigate future misunderstandings. I can be reached by e-mail (email@example.com) or by phone at (301) 251-1180.