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INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads | | SEPTEMBER 23, 2002 SMART ANSWERS By Karen E. Klein No Sweeping a Contract Under the Rug There's no service business so humble that it doesn't need the protection of a hard-and-fast legal agreement with customers
A: While home-cleaning services do not always insist on detailed formal contracts with their clients, a commercial service needs the protection of a clear, specific agreement. This not only defines what is expected of both sides in terms of services and payment, it also protects your outfit in the event of a legal dispute. One a more day-to-day level, if a client complains that your cleaning is not meeting expectations, you can refer to the specific conditions and performance standards laid out in the document. A contract can also be a big help if it specifies a time frame. A six-month commitment with a large client, for instance, will provide reliable cash flow and help you budget your expenditures for the entire year. DO-IT-YOURSELF. Legal do-it-yourself Web site Nolo.com offers a helpful overview article on what contracts do, legally, and how you can write your own enforceable contracts in plain English: If you feel more comfortable with a boilerplate document, consider purchasing Legal Forms for Starting & Running A Small Business, which is available from Nolo's online store. The book and CD, written by an attorney, sell for $20.97 and include seven employment forms and contracts, one of which can probably be adapted for your purposes. Whether you write your own contract or use a template, make sure the terms and responsibilities of both parties are very clear. Don't make the mistake, as so many eager entrepreneurs do, of being so keen to close the sale that you neglect to mention additional costs or penalties your customer may face if he or she later demands more services than the contract specifies. For example, if your client wants you to clean three bathrooms twice a week, make sure you write that detail into the contract. Otherwise, you may be pressured into cleaning five of them every evening because the contract says nothing more specific than, "Clean office restrooms." SPELL IT OUT. Experts say that you should not depend on your clients to read the fine print. Make sure you point out that any additional services will require additional compensation. And before your client signs the contract, make sure all the terms are understood. If you feel that a customer is likely to ask for contract changes a few months down the line, be sure to devise a clear policy relating to those changes. State what types of changes will incur extra charges and how much notice you'll need before they become effective. You may have to hire more staff to accommodate the request, so taking this precaution is vital. Building in a one- or two-week window for yourself will help you avoid the last-minute scramble to hire employees. And, if you can implement the changes without needing extra lead time, your client will be especially grateful.  Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 46th Floor, 1221 Avenue of the Americas, New York, NY 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally. Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | SEPTEMBER |
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