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The Essential Business Owners Guide to Business Contracts

Updated: Feb 25, 2023

Article Author Kristin Louis

Starting and running your own business isn’t simple, but it’s easier when you have the right tools. Business contracts are essential documents that keep your business on track and give you tools to protect yourself from legal trouble in the future. Whether you just started your business or plan to start your own soon, this guide courtesy of Acorn HR Services gives you all the information you need to know about business contracts, from how they’re created to why they’re so important in today’s world.

Why Do You Need Contracts?

Without a business contract, a company has no structure and risks issues down the line. It also lacks a formal and legal voice on subjects ranging from competition to trade agreements. Contracts protect your brand and build goodwill with customers. Letting customers know you have a contract could encourage people to buy from you. At a minimum, it shows you're committed to doing business as efficiently and safely as possible.

Creating Contracts

A thorough contract is a good way of addressing party obligations. The best contracts provide certainty of rights and obligations and encourage transparency. They include clauses covering who owns any intellectual property created in the business relationship, what happens if one party goes bankrupt, whether personal data is shared with any third parties, and resolving disputes.

How to Negotiate a Contract

Each negotiation is different, and the trick is identifying where your priorities lie. By prioritising your objectives and knowing what you want, you can figure out how best to deal with the other person. If you can get a glimpse into the other party’s motives, you may be able to adjust accordingly. Confidentiality allows both parties to openly express needs and interests — ultimately creating a better contract for everyone involved.

Mistakes To Avoid

Rushing through negotiations is a common mistake among inexperienced business owners. In most cases, experienced businesspeople can negotiate themselves, but if you’re new in business and don’t have experience negotiating deals or contracts, you may want an attorney or consultant to help you. These individuals can help structure your proposals and determine what it will take for parties to accept your offer.

What Should You Consider in Your Next Contract Negotiation?

Research can play an essential role in negotiating contracts. By Googling and finding relevant information, you can learn a lot about the organisation or individual you'll be negotiating with. You might learn something that benefits you in your negotiations. For example, knowing what prospects paid for similar services could help you negotiate more effectively by giving you a range of what's reasonable to ask for.

Editing Contracts

If you’re not used to contract writing, it can be easy to get overwhelmed by its nuances. Fortunately, there are tools that make creating and editing contracts much easier. For example, if you receive contracts in a PDF, convert your PDF to docx to allow you to create, present, edit, and modify contracts. Once you’ve made edits, you can save it and share it with stakeholders.

Sealing the Deal with a Solid Contract

When you’re in business, there’s no denying that contracts will come into play at some point. By learning how to negotiate, mistakes to avoid, and how to revise contracts, you can create a strong foundation for your business by protecting yourself and your assets with a solid contract.

For your business’s HR needs, contact Acorn HR Services today!

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