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The Importance of Contracts in Small Business

Lolo Siderman, Founder and CEO of Gypsywing Media (http://www.gypsywing.com/) discusses the importance of contracts. This video breaks down how contracts will protect you in small business.

  1. Small businesses rely on good client relations
  2. Clearly state the expectations on both sides of the agreement
  3. Contracts help reduce unexpected expenses
  4. Accurately calculate projected revenue

As a small business owner, having contracts in place is very important. Sometimes it’s even more important than for a large business.

Our client relationships are the blood of our business. And so keeping those relationships intact is vital. Having that contract, while a little uncomfortable, in the beginning can save our relationship later on.

A contact helps clarify exactly what’s expected of you and what you expect of your client. It’s all in writing and if there’s any confusion later, you can go back to it.

Another thing with small businesses is that we tend to have limited resources and a limited budget so if you have a client where they’re requesting more or the scope of the agreement is moving beyond what you’ve expected, that can really start to hurt your cash flow, it can hurt your resources, it can hurt your budget.

And having payment expectations in place is important as well because you are relying on whether it’s a deposit or halfway payment or how you’re paid at the end. You don’t have a ton of business. You have a limited cash flow, you have limited resources. And making sure that you when money is coming in is very important for your business and your planning.

A contract is a great way to keep the relationship and the wonderful friendly side in tact while having the professional side on paper laid out very clearly.

So having the contract can really save the relationship, save the job and make your position much easier as a small business owner.