HoneyBook: Protecting your Business with Contracts
While the intricacies of work life for independent small business owners vary greatly, one common technicality is handling contracts. Some contracts, such as work agreements, connect businesses and clients while others, such as office lease agreements, allow business owners to do their jobs. Because contracts are what make things happen in today’s modern world, it’s important for business owners to understand how contracts work and how they are necessary to protect a business.
What is a contract?
A contract is a binding agreement between two parties; typically one that guarantees the exchange of assets or services. While the modern definition of “contract” didn’t come into existence until the 1600s, binding agreements have existed since Mesopotamian times. Bartering practices such as the exchange of sandals may have been sufficient documentation in past eras, but the complexities of our current world require documentation with wording so meticulous that they should almost be considered works of art.
While contracts are as diverse as the individuals on either side of them, a true contract always has three parts: the offer, the acceptance, and the consideration (the asset or service that is being offered and accepted). Because contracts ensure a value swap between two parties, both parties must share a “meeting of minds” in their understanding of the transaction. Well-written contracts allow for the consideration to be offered and accepted within intricate parameters.
What does a contract do?
A contract allows a value-exchange to happen, which translates to work accomplishments in the real world. Among other things, a good contract will:
Outline the duration of the agreement
Define the terms and type of service
Identify needed materials
Designate responsibility between the parties
Protect both parties from legal ramifications
Provide for various situations, exceptions, and unexpected emergencies
Denote any contingencies
Make provisions for amendments
Determine how results and success are measured
Regardless of whether a contract applies to a business or to personal affairs (e.g. marriage, summer camp registrations, car insurance), it is usually necessary for it to be ratified (signed by both parties), before any work or experience of stipulations can occur. Failing to ratify a contract that establishes the above aspects in a clear, measurable way opens up both parties to possible legal dangers that can be harmful and costly.
Protecting your business with contracts
When it comes to business agreements, each contract must adhere to industry standards in order to offer protection. If this sounds like a hefty order, you’re right! But failing to appropriately create and establish a contract could result in lawsuits or even the closure of a business.
Thankfully, resources exist to help professionals of all levels draft and organize effective contracts.
Contract templates
Different industries, and services within them, require different contract elements. While some business owners may know their work well enough to draft a functional contract, it’s easy to overlook contingencies or other significant elements with legal ramifications.
Contract templates help to combat this problem. A contract template is a shared pattern for a particular type of contract that can be updated and personalized for specific business situations and clients. Hundreds of free and for-purchase contract templates exist on the internet to meet a plethora of industries and scenarios.
While using a contract template can save you a lot of time and hassle, not all templates are created equal. Even if the template you purchase is more-thorough than what you could have drafted on your own, it may not be sufficient to cover all bases. While it is still in your best interest to seek legal counsel before using a template for your transactions, here are a few questions to ask when trying to decide on which template to use initially:
Does the contract template refer to all necessary details of the work agreement or provide designated spaces where you can clearly do so?
Does the contract outline a clear timeframe and expectations for what would constitute contract termination?
Does the template include unforeseen circumstances, arbitration, confidentiality, the entire agreement, and intellectual property clauses (all important in today’s world)?
As is likely clear by this point, answering these questions requires you to do your research. Knowing your industry and the types of contracts other practitioners are using will help you to know what clauses, wording, and terms your business needs. While a good template and some legal oversight will cost you upfront, it can prove invaluable financially and mentally, should, God forbid, something go south between you and a client down the road.
Creating and managing contracts through HoneyBook
While it’s not a replacement for legal advice, HoneyBook gives independent business owners an “assistant” of sorts in the daunting contract process. HoneyBook allows you to store and manage business contracts in one convenient location while fostering accuracy and confidentiality.
HoneyBook memberships include ready-to-use, legally binding contract templates for a variety of industries that you can customize and tweak for your needs. As for other HoneyBook tools, business owners can insert smart fields that allow them to auto-fill their contract fields with dates, names, and other data. Using templates will save hours of time in drafting clauses and copying/pasting information. Additionally, it has a feature where you can preview a contract as if you were the client, which allows you to ensure all signing fields are where they should be.
When it comes time for signatures, clients can sign the contract from any device even if you are not with them. When both of you must sign, HoneyBook can send you notifications once it's your turn. This allows you to be out of the office while continuing your productive day in the meantime. HoneyBook also saves copies of the contract for both you and your client, which means that papers and files are less likely to be misplaced.
HoneyBook allows contracts to be a seamless part of the workflow, which allows work to happen sooner and builds client confidence. You can allow assigned team members to see/view the contract and have ratification be the initiation of other project steps. And while you want to be careful to not overstep the bounds of a contract, you can supply text, images, and videos to introduce your contract to your client, or answer any questions you might foresee them having.
And just in case you didn’t know, while HoneyBook contracts should not replace legal advice, the templates were designed by consulting legal advice. This means that using a HoneyBook template gives you confidence that you are making a great start.
Contract tips
When it comes to contracts, you always want to make things easier and more efficient. Here are a few, final tips for consideration:
Use HoneyBook to combine contracts and invoices together in a proposal. The ultimate time-saving tip, this merger will create a more streamlined system for both you and your client.
Make sure the parties’ names are entered correctly. While this may seem to go without saying, you might be surprised how frequently spelling errors create trainwrecks for business transactions.
Use CLEAR language. Avoid emotive language or vague language. Don’t use impressive legalities when common words will do.
Always strive to protect confidentiality. Make it a habit, even if/where it doesn’t seem necessary. You are a professional; this just makes sense and is a practice that will serve you in the long run.
Get to know your contract well. HoneyBook is your friend, but make sure that you personally know where all of the required signature fields are and what your contract says. This will better help you answer client questions as well as give you a leg-up if your work requires negotiations.
Consider developing a client FAQ sheet or video walkthrough about your contracts or workflow and include them among your other HoneyBook welcome packet resources. While you want to point clients to the text of the actual contract whenever possible, you can answer many questions up front and provide feelings of security by demonstrating how to walk through the signing service portion of your workflow.
Always keep in mind that your contracts impact your future. A business’s economic and emotional future is created through client interactions, of which contracts are of top significance. While most contracts do not allow for overly casual language, do what you can to make sure your wording is clear and upholds your brand.
Adjust your contracts and templates as necessary. While you can’t adjust a ratified contract without an addendum, you can certainly update your contract as your business grows and you learn how to better run and protect it. It is also sometimes necessary to make updates to new legislation and required practices developed for the industry.
Once again, if your industry requires state documentation and/or specific contract forms, you must use them. DO NOT create your own and do not assume that a template, even a wonderful HoneyBook template, will do the trick! While it may seem tempting to do things your own way, not following standards can lead to malpractice lawsuits that could destroy your business’s future.
Final thoughts
When it comes to your business, contracts aren’t optional. Because they protect all aspects of your personal and business life, they should be initiated from the first day of your business.
Your business deserves to run through the assistance of the highest-quality contracts. The payoffs of having such contracts will be huge, and not just for you: your client will appreciate working with a business that offers clear contracts that make them feel cared for and protected. HoneyBook allows you to both create such contracts and seamlessly integrate them into your workflow so that you can be the powerful business person that you are!
To learn more about how HoneyBook can improve your contracts and workflow, check out our Free honeybook setup guide or contact one of our wonderful team members to help you draft a contract. Don’t have HoneyBook yet? Great! Get your subscription at 35% off by using our affiliate link.
WRITTEN BY: KATIE BARNETT
