Sometimes, legal doesn’t seem very exciting. Legal is what you feel like you need to do to “protect yourself”. You think it is something you can get to when you get to it. You don’t think about legal in the same way you think about your business systems. The way you think about your product. The way you think about customer service.
When you think of growing your business, legal planning probably doesn’t even cross your mind.
What if I told you that isn’t true. What if I told you, you are dealing with legal every day. That legal is an integral part of your business. Would you believe me?
Our legal system is the foundation of business. All of the business transactions you deal with every day are based on the law of contracts. The system of contracts. Everything in business is contractual. That means, everything is subject to the law of contracts. Even if you don’t get it in writing.
Contracts define every relationship you have in business. Whether or not it is in writing. The law will determine the outcome of any problem you have in your business. If you don’t take some control over the situation you are simply leaving it to chance that nothing will ever go wrong, and if it does that everything will work in your favor. That is a dangerous way to build a business.
You wouldn’t leave your sales up to chance, would you? You build systems in your business to make sure you can measure success and failure. One of the benefits of creating systems is that it helps you know where things should go and how they should go. But, without legal, all of your work may be for nothing.
Legal Planning is Often Ignored in System Building for Business
No matter how good a system you build, if there is no contract at the end of it, you are leaving everything up to chance. You can develop a sales system with an 85% close rate. You can develop a delivery system that consistently gets you 5 star reviews. Without legal, it can all come crashing down with one dispute. If your sales system doesn’t drive to a contract that outlines how you will be paid and your delivery system functions before you receive full payment, what happens when you aren’t paid. What happens when you have delivered, but the check bounced. Are you willing to rely on your memory (or that of your sales team), a few emails, and the court system? Do you want to battle your customers over issues that could have been covered by a well written set of terms? Or a good FAQ section on your website?
Legal Planning Protects Everyone
Legal issues aren’t just to protect you. Your policies for your staff and independent contractors can help protect everyone from mistakes. They outline what should happen and how it should happen. Your business systems, with proper legal documentation, help you keep everyone moving in the right direction. Your customer contract keeps everyone on the same page. It protects you, but it can also help your client understand who is responsible for what. And, if your legal planning includes dispute resolution, you can help simplify how to resolve any disputes.
Legal Planning Isn’t Something You Do Once
Just like you constantly develop your systems, your legal planning and your legal documents need to be updated. But, you have to get started first.
Making Your Legal Planning Work for You
If you have developed some agreements to work with your systems, it is important that you are consistent with how you use your legal documents. After all, having legal agreements is only half the protection. You need to make sure your agreement is there for you when you need it. Here are a few of ways to make sure your agreement is working for you to protect your business as it grows and make sure you can enforce your rights if it ever comes to that.
Use Your Agreement With Everyone
I mean everyone. It doesn’t matter how well you know a person. Use the agreement to document every relationship you have in your business that applies to that agreement. (You should have a written agreement that documents every relationship that exists in your business.) Even if your brother wants to work with you, make sure you use your agreement to document the business relationship you create.
Develop a System to Store Your Agreements
Agreements are not helpful if you do not have a signed copy of the agreement. Make sure, when you send an agreement to be signed (in PDF), you receive a signed copy back. I recommend an electronic signature service if you are regularly signing documents. That way, with a few clicks of a button, you can have everything signed and know you have a copy of it if you ever need it. Also, make sure to keep any correspondence, emails, or any other notes you made regarding each relationship and each agreement in a file. It is okay if your file is electronic, just make sure you have access to it. That way, if you ever need it, you know where everything is.
Document Changes in Terms
If you agree to make changes to the agreement or you adjust your payment due dates or fees you are charging, make sure to put it in writing. Every time. Verbally agreeing to modify a part of your agreement without having anything in writing can create problems if you ever need to enforce your agreement. So, make sure you get it in writing or you may inadvertently create a new contract.
To protect yourself from liability, you need to work these tips into your business systems. Your legal can only help if you use it properly and you can locate everything when you need it. But, you need to make sure it is second nature to you to document everything in a way that you can use it if you ever need it.