When it comes time to forming business agreements, you’ll need to make sure that all your agreements are detailed, rock solid and ironclad.
In this regard, there are a number of traps that companies fall into by failing to create these agreements in the proper or most effective way. Whether you want to know more about verbal contracts, written contracts, or even what constitutes a contract, sometimes it’s best to learn what not to do.
Consider the points before and make sure to avoid these mistakes.
1. Failing to Include the Necessary Terms in the Contract
Regardless of what type of contract you put together, there are a few essential terms that you need to include.
For starters, it’s important that you include terms of acceptance and offer. It’s also important to include consideration, which lists the obligations that both parties are willingly bound to.
Whenever contracts are put into place, these sorts of terms need to be included so that you have grounds to enforce the contract if it is ever contested in court.
2. Failure to Have any Form of Agreement
When at all possible, you should have a written contract as opposed to a verbal contract.
This is the big one that a lot of companies end up falling into. Don’t assume that just because you know someone, that you don’t need to put the agreements in writing, or at the very least some form of an expressly detailed format.
When you don’t have the terms laid out plainly, you are only operating on assumptions, which don’t protect you in any form or fashion in court. This can be the difference between lots of money that you are entitled to and equity in the business.
3. Overpromising and Under Delivering on Investors
Your company needs equity when it’s getting started, and this often means making the right investment decisions.
Getting investors involved is the first part of the business because it helps you to get capital and use it to get up and running. When you are putting business partners together, they will often be likely to want to go forward with you when you can show and prove that you have investors in place.
However, never feel tempted to embellish or overshoot your mark to the point that you are making promises that you can’t keep. In many cases, your agreements will be put into place contingent upon your ability to put investors in place.
If you can’t deliver, you might also lose several business partners.
There are several investment strategies you can put into place when it’s time to start a business. You can find investors through places like online resources, alumni networks, crowdfunding, and mentors.
By factoring in these strategies it’ll be easier for you to get your business up and running.
Written and Verbal Contracts — Handle Your Business
Whether you are looking into verbal contracts or written contracts, be sure to handle your business accordingly. These tips will get you started.
Take the time to contact us when you need any sort of business or investing advice.