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The Importance of Written Agreements
While a gentleman’s agreement might be good in theory, generally it is best to avoid this type of agreement as a business owner. Friendship is wonderful, but business is business. Business owners who operate without written agreements may find themselves at substantial risk.
Clarifying Expectations
When you enter into an agreement to provide services, a written agreement serves as a model for defining the responsibilities of each party. Without a written agreement, if a dispute arises, you may find yourself providing services that are beyond your original expectations. Let’s face it, time is money and if you have to spend additional time providing unexpected services, it may cost you significantly.
Payment Expectations
Written contracts leave no room for error on payments. When an agreement is verbal, there may be disputes regarding when payments are made and how much those payments are. Removing any doubt about payment is a crucial component of a well-written small business contract. A written contract also means that if a dispute about payment arises, you have recourse through legal channels.
Disagreements Cause Losses
When you fail to have a written contract with a client or provider, you stand a greater risk of losing time and money. Not only will you find yourself in a “but I said…” situation, you may not have any opportunity to recoup funds that are due to you.
Small business owners should think carefully about accepting any client without a written agreement. While it may initially seem that a handshake is all that is needed to secure the deal, problems may occur later that will cause deep regret. Work with your clients closely, establish a firm policy of working with a written contract and spell out all of the details of your agreement. Should any disagreements occur after the signing of a contract, you will have a written document that proves what everyone agreed to originally.
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