The Pre-Nup of Business
In the beginning of a new business, excitement runs high. Like any new relationship there is a “honeymoon” time. That is the perfect time to get those “pre-nups” set and clearly drawn up. Of course, in a business we are not doing an actual pre-nuptial but it is very important to have written agreements.
Agreements help define the terms of the engagement between you and your partner(s), vendor(s), anyone you are doing business with. Even a simple written agreement will reduce the chances of a dispute.
Here are 5 good reasons why you should always establish an Agreement:
Agreements set expectations for everyone. They define the scope of work, timelines, and other terms before the work starts. Who is doing what, who is responsible for what and by when. An Agreement, once approved by all parties, can be edited later if all agree. You can pivot, and learn and grow and still maintain a written agreement.
They establish when you want to receive the payment. The Payment term defines when you or your partners get paid, how they get paid and how that aligns with delivery of agreed product or service. Set realistic expectations that you can commit too and honor.
They offer payment protection. Make clear what happens when people do not or are unable to honor a payment commitment. Set an agreement that you feel secure that funds are available and that payment will be made once the work is delivered.
They help keep everyone informed. Establishing how to communicate and when to provide updates in the agreement helps keep everyone informed. A good agreement provides ongoing stability that everyone is meeting their expectations and achieving the goals.
They play a key role in Arbitration. In case of a dispute, an Agreement is the reference point for the Arbitrators and impacts the decision of the case. That simple sentence is enough of a reason to ensure you have written agreements for conducting business.
In short, if you want a happy “marriage” with your partner(s), vendor(s) and those you do business with get that “pre-nup” operating agreement! Of course, if you have specific details you need to cover in your agreements, you should contact a business attorney to draw up your legal documents. But, even a "generic" written agreement is better than nothing. A word of caution: this really is not a DIY situation. Don't just wing it with your own wording. You should at least follow a legal form or template. If this is the route you want to go, you can find a number of legal form services online that charge by the document or offer various subscriptions.
We recommend Rocket Lawyer.
Why? We have used this online service to create some quick and basic business documents. With a variety of templates to choose from, and step-by-step instruction to customize the documents, we found it is a simple and relatively inexpensive way to meet the most basic of legal business needs. Heck, if you just need a one-off, you can just pay per document without a subscription commitment.
Click this link to visit the RocketLawyer website to learn more.