Why you need a service agreement in your business toolkit
You’ve landed a new client and excited to get stuck into providing your awesome service. As a business owner, it’s tempting to forget formalities of service contracts, and seal a deal with a simple handshake, to get on with the work. After all time is money.
Yet, it only takes a slight misunderstanding or miscommunication for a healthy business arrangement to go sour. This is not beneficial for either party. Consider the impact to your business brand. A client service agreement is an important legal document, which defines the business relationship, reducing uncertainty and providing protection between your business and its clients.
As a law graduate who previously worked as a National Contracts Manager, this topic is something I’m passionate about sharing with you. Having the foundations of your business firmly grounded (like your standard operating procedures, business plan and contracts), will allow you to confidently scale and communicate effectively and with ease.
Often people don’t formalise agreements because of the perception that legal contracts are expensive and confusing to understand.
So, this blog will explain not only why it’s prudent business practice to have a service contract, but also how you can obtain one for your business, with the ease and at low cost.
How I met Michelle?
When I first started my Virtual Assistant business and drafted my service contract, I wanted a virtual lawyer to review it for me, I wanted someone who genuinely cared about customers as much as I did. I was also looking for someone who had strong ethics, and who didn’t want to confuse the ‘lay’ person with complicated unnecessary legalese. A business owner friend suggested I contact Michelle.
I’m so glad I did. Michelle Whitehead (who amongst other talents is a Lawyer who graduated with first class honors, offered a simple and fast turnaround for my contract review. I further engaged her to advise me around a new interstate client concerning some primary contract terms. I became so impressed by Michelle’s service, I decided to become an affiliate for her contracts that care. She is my only affiliate to date as I do not choose affiliates lightly.
I interviewed Michelle to share with you some insights around legal contracts. Some watch outs and why contracts are a necessity for businesses of all sizes.
Why do small business owners need service contracts as part of their business toolkit?
“The more clarity and certainty you provide for your clients and those you work with, and the firmer your borders are – in writing, with their signature or acknowledgement that they have read it – the less likely people are to question it, push the boundaries, or try to argue their way out of agreed commitments.
By giving them a contract, you have empowered them to take responsibility for the obligations they have agreed to. It also strongly sets your intentions (visualising the clients you want to work with), so you attract clients who respect those boundaries! There are four situations where I think a client agreement is a necessity – and this goes for pretty much every type of client relationship:
- where there is a lot of money invested in the transaction
- when a lot of time is invested in the transaction
- where there’s a significant risk of harm to the client if misunderstandings arise (personal, physical, financial, emotional); or
- where having a client agreement would make either of you feel more comfortable.”
What are some risks by not having contracts in place?
“Your contract gives your clients certainty, so they know what to expect. Without one, there is more likelihood that they will feel anxious about working with you.
If you don’t have important policies (such as your payment terms, refund policy, cancellation policy, missed and late appointments’ policy) clearly spelled out and provided to your clients in advance, you won’t be able to rely on them or enforce them when things don’t go according to plan.
If your contract doesn’t set out what you are responsible for and where your responsibility ends, you risk having to deal with scope creep, where your clients keep expecting more and more from you, and you risk liability for foreseeable dangers that they need to be warned about, so they can make informed decisions. Intellectual property ownership and confidentiality requirements can have far-reaching commercial consequences if not dealt with and agreed on upfront.
Finally, if your contract doesn’t have a strong alternative dispute resolution strategy, you risk being sued when there’s a problem, instead of keeping court action as a last resort in case you can’t work things out between you after making a genuine effort to do so.”
How can I get some assistance with setting up service agreements?
“To ensure all Australian business owners have access to professional documents, I’ve created a range of affordable DIY options for many commonly used legal documents and I’m creating more all the time. These are not generic one-size-fits-all templates. They are comprehensive worksheets that walk you step by step through the process of writing your own legal documents from scratch. If you’re not confident in your ability to get this done, I offer a range of accountability and editorial support services to make sure you can cross this important task off your to-do list.”
Why did you create Contracts that Care™?
“I created my Contracts that Care™ DIY Packs to meet the needs of intelligent, creative entrepreneurs. These businesswomen and men wanted to give their clients the certainty and confidence that comes from strong boundaries and solid foundations. But they did not want to tie them up with barbed wire. I wanted to create highly customisable documents that would be suitable for diverse businesses that did not fit in traditional boxes, and that would allow my clients to take ownership of their legals, instead of feeling alienated from them.”
What makes your contracts stand out from the rest?
“Through my DIY Packs (and in my custom drafting work) I prioritise writing contracts in language that feels natural and comfortable – the same language that my clients use for their marketing – so their clients are more likely to read and understand them.
My aim is to support my clients in creating contracts that come from the heart of their business and which do such a good job of managing the relationship between my clients and their clients that misunderstandings and problems are less likely to eventuate.
My clients often tell me how much they love their contracts, which is not something lawyers often hear. My DIY Packs are also unique in that, instead of being one-size-fits-all templates, they are questionnaire worksheets which guide you through every step of the contract creation process. In addition, I provide a range of support services, from the free 1-hour Accountability Action Session that comes with every DIY Pack, to my Review, Done for You and VIP upgrades.”
Manage priorities, not time. Larry Winget.
HOT TIP – Michelle’s DIY contracts will be going up in price in the new financial year. Save yourself more than once by clicking this link. If you purchase a DIY pack (without navigating out) you will be supporting my small business, at no additional cost to you. From me to you, a big thank you in advance.