n honor of National Small Business Week, Doerner is pleased to show our support by sharing a series of insightful business tips for entrepreneurs and small businesses to help improve their business strategies. This article is written by Attorney Matthew T. Crook and it is the third of several articles in this series.
Every small business owner believes they have that “it” factor which will enable them to succeed where their competition fails. The “it” factor may be a particular skill, a competitive advantage or just an unconquerable will to succeed. Each of these may, indeed, be the piece that will enable your business to prosper and grow, while others fall by the wayside. Nonetheless, you should consider embracing some important steps to enhance your particular “it” factor.
Step 1: Establish a Revenue Contract
Every small business owner strives to deliver the best product or the highest quality of service to their customers. What is frustrating to any business owner is to produce a great product or perform quality service and to not get paid by customers. In other words, to successfully grow your business, you have to collect for the work you do, which leads us to the bread and butter of every business – the revenue contract.
A revenue contract is what a business should use to perform its primary service or produce its primary product. However, too often attorneys see businesses rely on revenue contracts found off the internet and adapted unsuccessfully for their own use. Such contracts are ill-suited for many businesses’ needs. The contracts are overwhelming, dense and unreadable to the customer. Even worse, the vast majority of the contract verbiage is unnecessary.
An attorney can assist you in preparing a simple, concise contract that conveys the terms of your arrangement with your customer while protecting all of your rights, including the most important aspect – making sure you get paid. For instance, does your contract call for progress payments as you perform services? Does it ask for a material down payment by a customer when they make a sizeable product order? Does it address how your business will respond to customer concerns with your business’s services or product? These are just a handful of significant circumstances to consider and why you should seek the counsel of an experienced attorney for the long-term success of your business.
Step 2: Successfully Collect the Money You Are Owed
Business owners often contact an attorney to seek advice when they cannot collect from a customer or client. The first question we are likely to ask is how much money are you owed? If a customer or client owes your business $10,000, that’s a significant amount of money, and frequently, the only way to collect is to go to court. By the time you pay the court costs and your attorneys’ fees, you may only net $5,000 if you collect everything you are owed. There is a popular misconception that the party who wins in court is entitled to have their attorneys’ fees paid by the other side. Known as the American Rule by attorneys, each side in a court case typically pays their own attorneys no matter who wins – except in certain situations where the parties’ contract states the loser pays the winner’s attorneys’ fees
If your contract provides that the prevailing party gets their attorneys’ fees paid by the other side, you can be made whole. In fact, this will sometimes be enough to entice the customer to pay without the necessity of going to court in the first place.
Step 3: Evaluate Business Partner Agreements
Many small businesses are composed of several like-minded entrepreneurs. If you have business partners, are your partner agreements well-drafted and clear about all the eventualities that can face your business? What happens if one of you becomes seriously ill or dies? Does that person’s spouse become the new partner? If not, is the business required to buy them out? If so, is that payment due all at once or can it be paid out over time? What if the business is approached by a buyer and two partners want to sell, but one does not? A properly drafted partnership agreement can address these issues and save the parties’ disagreements and legal expenses later. Instead of being viewed as a distasteful expense, small businesses should look at their legal counsel as a valuable tool to help them protect and grow their business.
If you would like more information about how an attorney can help you grow your business, our law firm can assist you. Contact Matthew T. Crook at 918-591-5261 or mcrook@dsda.com to schedule a consultation.
Doerner, Saunders, Daniel & Anderson, LLP provides this content for informational purposes only. It is not intended to provide legal or other professional advice nor does the transmission of this information create an attorney-client relationship between any attorney of the Firm and the reader. If you seek legal advice or assistance, please consult with a competent attorney familiar with the applicable laws. If you wish to initiate possible representation by an attorney with this Firm, please call the attorney of your choice. You will be advised of our processes to avoid conflicts of interest and requirements of our letter of engagement before the commencement of representation.
