Your terms of business must suit YOUR business Your terms of business is the most important document in your business. It dictates how you interact with your customers…and it’s your customers that make you money. Get your terms of business wrong and you end up with the biggest problem for most small to medium sized businesses – poor cash-flow.
And, if you think that cash-flow isn’t bad enough, you then realise that you are exposed to unnecessary law suits because you haven’t excluded liability for certain events and have no remedies for chasing those late payers.
Think about it: how many customer transactions do you have a year? What is their value? With things figures in mind, do you think it is worth investing a little bit of effort to get your terms of business right?
Effort means working out what you need first If you wouldn’t put a bicycle wheel on a car, then you wouldn’t use just any old terms of business as your own. First, you need to understand the nature of your business. Is it the same as the business whose terms you are copying? Invariably the answer will be no – that’s because all businesses are different and have their own special requirements.
There are many different types of business. Some sell products, some sell services. Others don’t sell at all, but hire products out. Some deal exclusively with consumers others exclusively with business clients. Some operate internationally, others simply domestically. All these factors will effect what goes in the terms of business. Get it wrong and it would be like driving your car with one wheel smaller than the others – it will sure be a bumpy ride!
Why you can’t copy your competition The obvious answer to this problem would be to copy your competition’s terms of business – after all, they have the same terms of business as you, right? Well, maybe, but not necessarily. As a competitor, you will want to differentiate yourself from your competition. That differentiation may reflect in your terms of business. If you have the same terms of business, then you run the risk of being the same. But, that’s not the most important reason you shouldn’t copy.
Never copy something that is broken If you are going to copy your competition’s terms of business, you need to be very sure that those terms of business are working well for their business. But, how can you be sure that those terms of business are doing just that? The answer is that you can’t. Therefore, it is better than you simply don’t copy. Instead, work out what you will need to make your business work efficiently.
How to work out what you need Working out what you need to put in your terms of business requires some analysis of how your business operates. You need to look into the future and say “What if such and such happened…”> That’s because your terms of business are their most important when things go wrong with a customer. If something goes wrong with your service or your customer, what are the comebacks?
Only by doing this analysis will you get it right. If you copy, you short circuit this process and miss out on valuable lessons about how your business really works. Worse still, you end up with a wheel that doesn’t fit which will inevitably lead to a very bumpy ride!
Need Help putting together your terms of business?
Download the Terms of Business checklist. The checklist has been specifically designed to allow you to work out what you need to have in your terms of business. It guides you through the process of working out how you will deal with your clients and most importantly how you will get paid on time. The checklist is just $50 + GST and you can purchase this from our website.
Why you shouldn’t copy someone else’s terms of business - To learn more about this author, visit Michael Smyth's Website.
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Michael Smyth
(Visit Michael's Website)
Six years old sounds a peculiar time to
start to legal career, but that's the
first memory I have of going to my Dad's
law firm located in the heart of legal
London. So, with law running in the
family, the natural choice at University
was a law degree. I also had a keen
interest in Sports Law and obtained a Post
Graduate Certificate in the subject from
Kings College London.
I came to New Zealand for a year, but like
a lot of people I quite liked the place,
and I'm still here practising law as a
self employed barrister and running three
businesses: Approachable Lawyer,
Sportscounsel and The Sports Risk
Management Group (the last two even allow
me to combine my passion for law with my
passion for sport).
So in my 11 or so years of practice I have
read numerous cases, helped many clients
out of the mire and set up a number of
businesses. That means not only am I a
lawyer with an expertise in employment and
sport, but I am also a businessman. This
gives me a good insight into a number of
problems my clients face. I also like to
pride myself on my approachability - But
don't take my word for it, visit my
website www.approachablelawyer.com/pro
file.htm
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