Small Business Protecting Your Income

One of the biggest areas of weakness that I come across time and time again when visiting small businesses is regarding the contracts they have..or to put it more accurately … they don’t have with their clients and suppliers.

We all know how important clients are to businesses. If we don’t have any clients then we don’t have any income and eventually we don’t have any business. Many small businesses that I see have a few large clients that they rely upon for a large percentage of their income which is supplemented by business from other smaller clients. So given that these “contracts” with the “large” clients are so critical to the business why then are there not written contractual arrangements in place? The vast majority of the small businesses I see do not have any written contracts with their clients. This may be fine when everything is going well but it is so risky and vulnerable to change. For example what if your main client contact changes and the successor has a preferred supplier that is one of your competitors?

So what to do about it? Well I agree that written contracts wont protect you against all eventualities and to take a client to court over a breach of contract is generally not recommended and potentially costly for you as a small business. But I do believe they serve a purpose and provide a degree of security. So please do yourself a favour and get a set of formal terms and conditions of contract signed by your clients – at least your most important ones. They needn’t cost you a lot of money to produce. You can either look at someone else’s and copy paste the relevant paragraphs or a good place to download templates for a nominal fee is www.clickdocs.com

Paul Stanford is a Director of 4Momentum http://www.4momentum.co.uk. 4Momentum provides business advisory services to small businesses, charities and social enterprises primarily in Sussex. Services include advice on starting a business, growing and transforming a business and selling a business. Clients typically contract 4Momentum for short periods of an hour to long term consultancy over many months for advice on subjects such as mentoring, business planning, sales and marketing advice, bidding for contracts, raising finance and general business advice. Paul is approved by the UK Government to deliver business advice on their behalf through Business Link and is a member of the Institute of Business Consultants. Visit his blog at http://www.paulstanford.co.uk/blog