When operating a business, its imperative to keep your company growing and moving forward. In order to achieve this, you need to market & advertise your product or service. Over the years, I have come across different types of customers. Some customers did not want to be committed to a contract. While other customers wanted a contract. I often get questions from start-up companies about this issue. Which is the better way to go? Will I lose out on business if I offer or don’t offer a contract? Lets take a closer look about these questions.
A contract protects both parties in the transaction. It should include a start date, estimated time of completion, materials, deposit amount, property address, your company contact info and lines for signatures and dates by both parties. If you are a service industry, you will want to include a frequency schedule. For example, this contract shall start April 25th 2015 and be effective for one year. If the customer is hesitant to sign a contract, I often put in an “Out.” clause. This clause will state something along the lines of, “Either party may terminate this agreement with a 30 day notice.” Think about it from the customers standpoint. They may have been scammed by the last three companies and were locked into a contract feeling helpless & used. By adding this clause, it shows you are confident in your quality of work and will be earning the customers business with each and every visit.
If a customer is set on not signing a contract. WALK AWAY!!! You have to ask yourself, WHY would a customer NOT want to protect themselves by signing a contract? Do they intend on paying you? Are they going to try and make you do extra work? What is their motive? What are they hiding? Its best to not do business with these kind of people and let them find another company to prey upon. You want honest, quality, long-term customers, not shady fly-by-nighters!
Here is one example of how a contract was key for me preventing escalation of an issue. I was just finishing up doing a landscape design. The last plant was installed and pine straw covered all of the planting beds. Everything looks amazing. When I did my final walk through with the customer, they became upset as they stated, “These nursery pots are 7 gallon, you were supposed to install 15 gallon plants, these are not the right size, you need to dig these out and install the 15 gallon hedge plants.” The pricing changes drastically the larger the pot size goes up and I was looking at another $1,200. in material. I explained to the customer, “We agreed on 7 gallon plants that were this size.” They argued and said, “they were 100% right and were not going to pay me until I installed the right size.” I replied, “Ok, lets do this, we signed a contract before I began working here. Lets take a look at the contract and see what it says. If it says 15 gallon plants, I will dig all of these out and install the 15 gallon plants at no extra cost to you. If it says 7 gallon plants, then I have completed this project as per our agreement. If you still want larger plants, I can install the 15 gallon hedge material and we can do a change order.” They both agreed. They both went out of the room 100% positive that it was 15 gallon plants that was written down in the contract. A few minutes later they came back into the room looking down and said, “you were right, it said 7 gallon.” I then asked, “if they wanted to keep the 7 gallon or if they wanted to upgrade to the 15 gallon?” They stated they were “Satisfied with the 7 gallons,” wrote me a check for the remaining amount, and I was on my way. Now what is I DIDN’T have a contract written… It would have been their word against mine! A contract protects BOTH parties involved and in this case, protected me.
If you are in business and looking to grow and stay around for the long run, I highly recommend using contracts with all customers. It protects both you the company & the customer. Honesty, Values, & Ethics means a lot when doing business. By writing a contract, you are holding yourself, (or business), & customer legally obligated to follow the terms.
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