Being an entrepreneur doesn’t come with all the knowledge attached to the job, so there are huge chances you can’t negotiate a strong contract. This is where a lawyer can step in and make things easier for you. And when we are talking about entrepreneurs, easier means safer as well as less expensive.
If you still think you can get away with it on your own, here are some of the common mistakes entrepreneurs make when signing a contract.
You’re not outsourcing
If you try to do it all by yourself, you will probably fail, so outsource the legal issues to a lawyer or a company of lawyers to make sure your contracts are sharp. You can also outsource HR and PR, which are two of the most important departments for a start-up. The time you will spend developing your business and leaving an experienced lawyer and PR do their jobs is going to save you a lot.
You’re not ready to negotiate
Each contract has an expiry date and a cancellation notice; some contracts have 30 days notice, others have 90 day notice. If you are not aware of these notices and when they come into action you might find yourself completely out of merchandise or supplies. Besides, people see when you have no idea you should have been negotiating another contract and they won’t be afraid to take advantage of this.
You have too much faith in your sales department
Some entrepreneurs choose to leave all the contracts to their sales team, which might be a good thing to do. After a while! Sales people have their own goals, just as everyone and they might negotiate something you don’t actually need or want, but which increases the price of a merchandise or service.
You pick the lowest bidder
When you pick the lowest bidder you can be lucky or not, depending on fate. Sometimes you get basic, decent services, pretty much what you’ve paid for; other times you get nothing but problems, which end up costing you twice or thrice as much as the initial cost of the cheapest provider. And you can’t afford to be cheap with a start-up.
You’re not negotiating in the first place
This one sounds strange, but lawyers see this mistake daily. Many entrepreneurs fail to read the terms and conditions, not to mention negotiate them in their favor. Among the clauses which can pose a lot of problems if not understood and negotiated are the auto-renewal clause, the downturn clause, the MSA and the technology clause.
You’re not using a draft contract customized to your needs
Using a customized contract with a form which suits and favors your company is a great way to skip the entire process of reading and analyzing terms. Your lawyer can help you structure the contract so it can include all the required clauses and all the unforeseen events that might occur. Some companies don’t even bother to negotiate the terms of customized contracts, which save you both money and time.