“My clients are so “nice.” Surely, they’re trustworthy. So do I REALLY need a contract?”

It makes me cringe every time I hear about business owner entering into a business relationship WITHOUT a written contract.  [Insert facepalm.]

At the most basic level, one of the major benefits of having a contract is that it helps clarifies expectations between the parties and avoids misunderstandings.  For example, if Jim and Jane agree that Jim will paint Jane’s house for $500 – at first glance, this seems clear enough. But when we dig in deeper, we realize that there are still a lot of unknowns. For instance, who is responsible for purchasing the paint and supplies? Is that included in the $500 cost? When will the work be completed? Will Jim be painting the inside or the outside of the house or both?  

Getting the gist, here?

A contract creates a platform for you to think through and clarify the key terms between you and your clients so you can minimize the risk of any disagreements in the future. And let’s not forget – should your disagreements every escalate where you’re finding yourself in court, contracts can help cover your booty.

An often overlooked, but equally important reason for having written contracts is that they communicate to your clients that you’re a professional and that you take your business seriously. It says “Hey, client – I’ve got my act together, so you should feel confident in hiring me.” And as the professional, it’s your job to educate your clients about your (and your client’s) roles and responsibilities.  Because, let’s face it, chances are your client has never worked with someone in your field and therefore, has no idea what is reasonable to expect from you and his/her role in the process.

And you know what we’re going to use to accomplish that? You guessed it – a contract. Smarty-pants.

Which contracts do you need?

Ok. So, you understand that contracts are super important, but which ones do you really need? The answer to that question will vary depending on the type of business you’re running. You can take this nifty quiz here to find out.  

If you run a service-based business, at a minimum, you’ll need a client service agreement that governs the relationship between you and your clients regarding your services.

Building a product-based empire? Then, having terms and conditions regarding the sale of your goods to customers is a good call.  

And remember, contracts aren’t just for you and your client or customer. If you’re hiring workers or other vendors to assist with your business, there should be a contract in place between you two as well.

And if you have a website for your business, get a privacy policy and terms of service for your website.

Remember, when in doubt, get it in writing.

Your future self will thank you.