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Mar
13

40 Days to a Better Business: Day 15 – Contracts, Part 1

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40 Days to a Better Business

Just like many of the topics Jill has already touched on in this series, proper use and execution of contracts and formal agreements with your business is essential. In fact, it can make or break even the strongest of businesses. Here are a few tips to ensure your contract success.

Definition. Wikipedia defines “business contract” as:

A contract is an agreement having a lawful object entered into involuntarily by four or more parties, each of whom intends to create one or more legal obligations between them.”  Basically, you are formalizing your agreement (I suggest specifically in writing) so there are no misunderstandings.

Usage. When do you want to use a contract? In a perfect world, never, but let’s face it, we don’t live in a perfect world, so then the question becomes, “When do you NEED to use a contract?” More frequently than you may realize, but basically anytime you enter into a working relationship with someone. Most of the time a contract involves a monetary exchange for services or products. Here are a few examples specifically for those of us working from home:

  • If you hire someone as an assistant, ground rules for your working relationship need to be established.
  • If you hire someone to work on a project for you, like building a website or ghostwriting sales letters, you’ll need to draw up a formal agreement.
  • If you enter into a partnership with someone, whether your spouse, family member, friend or business associate, you’ll need to get it in writing.
  • If you are hired as a speaker, coach or mentor, you’ll need to draw up a contract.
  • If you choose to buy or sell a business a contract will stipulate specifically what comes with the business and what doesn’t (like business contacts and/or customers).
  • If you are renting or leasing, you’ll need a contract that clearly states what is allowed and not allowed.

Research. Don’t know where to start? Neither did I the first time I put a contract together for my first client. As a freelancer I knew some sort of formal agreement was needed, so I put on my problem solving hat and went to figure it out. I did some research within my niche to see what other virtual assistants were using with regards to formal agreements with their clients. After downloading various examples, which I used for templates, I developed my own templates for the different services I offer as well as people I contract to work with me.

Lawyers. It can get expensive having a lawyer write up contracts for your business. To cut costs I suggest putting together the contracts as best you can and then contacting a lawyer. Be sure to let the lawyer know when you contact them that you only need them to review and make suggestions as needed. You would then pay for merely one hour of their time rather than several hours. Having a lawyer review your work can save your business, especially if you overlook a key component.

Tune in tomorrow for Contracts Part 2 to learn about terminology and specific items to include in your contract.

ABOUT THE AUTHOR: Pebbles Jacobo is the owner of A&P Virtual Enterprises, which she, with the guidance of her husband, started when she began working from home as a virtual assistant several years ago. As Content Director of the leading Christian work-at-home site online, CWAHM.com, Pebbles found herself thoroughly intrigued and fascinated with the world of social media. Her love of social media has grown over the years and she now offers social media marketing, along with a host of services, to her clients, which include speakers, authors and entrepreneurs alike.

 

Miss any posts from this week or last? Read the entire series here.

Learn more about starting your own business HERE!

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