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No Exceptions

April 1, 2011

Before my doors opened in 1995, I gained legal advice from my brother-in-law, who was an attorney, on how to create a simple contract for event planning clients.  I remember being told the contract didn’t have to be an extremely detailed document but it needed key components to protect me and my customers.

Contained in my first contract was a list of responsibilities I would perform for the client, a payment policy with fee and payment dates, and two signature lines – one for me and one for the customer.  The most important advice he gave me was to secure a signed contract no matter what. It didn’t matter the size of the event, the length of time it took to perform my duties, or how well I knew the person. The legal document would ensure both parties would get what they agreed upon.

In sixteen years there was only one time I didn’t have a signed contract before performing a project. It was with a very large, reputable company. I was assured payment wouldn’t be an issue but they needed work done within a week so they wanted me to begin immediately.    Against my better judgment and with my client’s verbal agreement ringing in my ears, I proceeded on the work. As promised, I delivered what the client wanted. It took a week to produce the product. It ended up taking them six months to pay the bill.

At the time I was a new entrepreneur so money flow was essential. Frustrated that I couldn’t collect the money, I spoke with an Accounts Receivable professional at another company, who gave me detailed instructions on collection methods. In time my relentless pursuit of the money paid off but not without investing a ridiculous amount of time. It was a difficult lesson to learn but one I never repeated.  A signed contract is a requirement for my company to start any project – no exceptions.

Recently when a client unexpectedly terminated a contract in the middle of the agreement period, I was fortunate to collect on a large non-refundable deposit I always require when events are signed. But I was still losing 50% of the revenue I expected to receive.  As soon as that lesson was learned, a bold, new clause in my contract was added regarding financial penalties for clients who terminate contracts within a specific time period.  

Today’s blog post is to remind you that you mustn’t enter any business arrangement without a signed contract or agreement. It doesn’t matter how small the job is, how well you know or trust the other party, or how rushed the project is. No exceptions. 

If you are new entrepreneur, learn more about legal documents and seek counsel on creating contracts. If you are a seasoned business owner, update contracts based on lessons learned.  It’s an excellent way to protect yourself and your customers.  If you need more information, join Women TIES on June 15th for a special legal program. Sign up at www.womenties.com.

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One Comment leave one →
  1. Jamie permalink
    April 6, 2011 12:16 pm

    Thank you for posting this advice, it’s something I need to do with my own business and really appreciate the reminder of how important it is to have a contract! I’m glad you are having a speaker to discuss in June, I will definitely be there!

    Like

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