Here’s What to Do Before You Sign on The Dotted Line

» Posted by on Jan 30, 2017 in Uncategorized | Comments Off on Here’s What to Do Before You Sign on The Dotted Line

Here’s What to Do Before You Sign on The Dotted Line

As a small-business owner, you ask clients, business partners, and associates to sign contracts nearly every day. Contracts protect you and your business from liability, detail party responsibilities, and specify dates and financial requirements.

You’ll also be asked to sign contracts. Before you sign, however, take a long, hard look at the contract details. Make sure it’s mutually beneficial and seeks to advance your business in some way. Before you sign, consider the following.

What Does It Say?

A business contract typically includes an offer, consideration, acceptance and mutuality. In other words, the contract asks something of the business owner, specifies remuneration as work or goods are delivered, proof that all parties had a meeting of the minds and agreed to the terms. The more detailed the contract, the better. But, it’s the details and fine print that can trip you up.

It’s not uncommon for a larger business to try to take advantage of a smaller one. Don’t fall for it. Everything in a contract is negotiable. If you don’t like or can’t agree to specified terms, attempt to negotiate.

How to Negotiate for a Better Contract

Small-business owners often find themselves in trouble by signing a contract that promises more than they can reasonably give. That is why it’s essential to analyze the terms of the contract and make sure you can meet them. If the terms are not acceptable, try negotiating.

Follow these tips to negotiate a mutually beneficial contract:

  • Ask questions. Perhaps one or more of the items on the contract is unclear. Ask questions, clarify and make sure clarifications are added to the contract.
  • Know your facts. Calculate the changes you need in order to make signing the contract worthwhile and do this before you meet. Is it more money, more time, or something else? Do your research and use facts to back up your change requests.
  • Recognize your worth. It’s easy for small business and startup founders to undervalue their worth. You may know you’re good, but you want to make a great impression, you need the business and you’re ready to make a splash. If you agree to terms that devalue what you do, you’re not only setting a bad precedent, but you’re also in danger of losing time and money. If you are not gaining something beneficial to your worth, then you simply cannot afford to do it.
  • Create a written fact sheet to share. You know your numbers, but a negotiation is more effective if the other party sees the numbers on paper.
  • Create a topic checklist to use during the negotiation. Contract negotiations can become heated and emotional. A checklist keeps you on track and allows both parties to remain focuses. Refer to it often and don’t be afraid to move on to the next topic if you reach an impasse or if emotions begin getting in the way.  You can always circle back to a topic later and sometimes having worked out other issues will allow the parties to put things into perspective.
  • Keep your cool. Stay cool; remain friendly. Leave the door open for the future. If this contract doesn’t happen, a future one might.
  • Be fair. It may be that the first contract suggested was completely one-sided in favor of the other guy. A fair agreement is a reasonable one for both sides — both sides have obligations and responsibilities and yet, both sides should gain something. If it’s not possible to execute a mutually beneficial contract, it might be better to walk away.