4 Benefits of Having Contracts for your Small Business

Last Updated on September 13, 2023 by Shayna Beeksma

Disclaimer: This article on small business contracts is intended for the purpose of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

Starting a new business can be incredibly rewarding and incredibly overwhelming. Not only are you trying to make your vision a reality, but you are suddenly thrust into entrepreneurship and everything that goes with it. From keeping your finances in order to figuring out how to best market your business, there is a lot to do.

So, amongst all those things on your to-do list, why should you prioritize having proper contracts? While there are many benefits, this article will focus on four:

• Contracts ensure all the parties know what to expect.
• They impact how your client views you and your level of professionalism.
• Contracts prevent scope creep.
• Finally, they affect your cash flow and make it easier to get paid.

Benefit #1: They get everyone on the same page

One main advantage of proper contracts is that they get rid of ambiguity. When you have every detail clearly defined and agreed upon, contracts get everyone on the same page, knowing what to expect and how your working relationship will move forward.

It can also save you time – instead of answering questions or clarifying terms, you can focus on doing what you love!

Benefit #2: It solidifies your image as a trustworthy professional.

Your contract is part of how you show up and represent your brand. Crafting a top-notch contract showcases your business as professional and dependable, showing your willingness to stand by the agreed terms.

A contract signifies your dedication to your business relationships and demonstrates that you’re placing your reputation on the line for the success of these relationships. Your contract sets the expectation that you will provide the same level of care throughout your working relationship, giving those who work with you confidence in the whole process.

Benefit #3: It prevents “scope creep.”

Service professionals are well-acquainted with the concept of scope creep. Scope creep happens when the original parameters of a project gradually expand beyond the initial agreement.

Without a well-defined contract, it’s easy for “one more thing” to multiply into a long to-do list, often leading to frustration, misunderstandings and more time on a project than you bargained for.

A comprehensive contract safeguards against scope creep by clearly outlining the scope of work, deliverables, timelines, and potential additional costs.

There’s less room for ambiguity when both parties clearly understand what’s included. You and your clients can be on the same page from the beginning, which reduces the likelihood of disputes arising from misunderstandings or misaligned expectations.

Benefit #4: It is better for your finances.

If your contract spells out what you will be paid and when it creates a more predictable cash flow for your business. This predictability allows you to plan your finances better, allocate resources, and manage your business operations more effectively.

In addition, having a solid contract means you are less likely to have situations where clients delay payments or try to renegotiate payment terms later. If there’s a disagreement about cost, you can refer to the contract terms and find a resolution based on the agreed-upon terms.

Protect Your Business With Beeksma Law

At Beeksma Law, we have the expertise to tailor custom contracts for your business. Rather than relying on generic templates from the internet, you can experience the assurance that a dedicated lawyer, well-acquainted with your business, is actively involved in crafting contracts that will bolster its foundations.

We are also closely connected to our small business community. Shayna Beeksma, the founder of Beeksma Law, is part of various groups for entrepreneurs and has mentored many small business owners.

We understand the challenges you face and the importance of solid contracts to protect the business you are so passionate about. Book a call with our team today to discuss your business needs!