4 Reasons Why Your Contracts May Be Losing You Business

As a business owner, have you ever wondered how your clients react to the contracts that you send to them for working with you? Are they overwhelmed by the contract and as a result they never read them or even worse, never sign them? If your clients are not signing your contracts, do they get forgotten and as a business owner you lose them (and their revenue) entirely? Written contracts can take many forms and in many industries, there is no set format that must be followed. It’s a bit of a wild west scenario. If you knew that your contracts were negatively affecting your business, wouldn’t you go to lengths to fix them immediately? I know I would. If your contracts suffer from one (or more) of the following faux pas, you could be losing potential clients and leaving a lot of money on the table.

1. Your contracts are too long. Imagine you are speaking with a business coach and she is telling you all of the ways you will work together to grow your business. You are so excited to work with her. She sends you a copy of her “standard contract”. When you click on the attachment to open the contract, your computer needs to work just to get that thing open. The contract contains pages and pages of text. How will you ever review and understand it all? You wanted a coach to help your business, not add to your workload!

Some contracts can just be way too long and turn off potential clients. The client may not have the time to read through it and as a result, they never sign up for the service. Not only that, but your lengthy contract could intimidate the potential client and cause them to look elsewhere for services. If you have multiple instances of this over the course of a year, this could easily cause your business to go under.

As there are no industry-wide templates for most contracts, it is difficult to define what is the correct length of a contract. Are 3 pages enough? Are 15 pages too much? My advice is that your contract needs to include all of the provisions to cover your business and all of the “what-ifs”. Some provisions can be cut from a contract but you need to be very careful what ends up being taken out of a contract. A commercial lawyer such as myself can help determine how to optimize your contract so that it is not so long that it will turn away potential clients but at the same time covers your business from a legal perspective.

2. There is too much legal jargon in your contracts. Lawyers have been using legalese for a long, long time (cue Exhibit A: “witnesseth”, “henceforth” and “ab initio”).

If a client reads language that they don’t understand there is a good chance that they will just give up on the contract entirely.

Thankfully, there is a trend towards drafting contracts in plain English that everyone can understand. This simply makes sense. This doesn’t mean that you are entirely off the hook though. There is still a very important place for certain legal language in order to ensure legal enforceability. One great example of this is referred to as a force majeure clause. This clause basically says that if the blockbuster movie Armageddon were to take place in real life, the parties do not have to fulfil their duties under the contract. Although force majeure is an example of that dreaded legalese, it still has a place in legal contracts. A lawyer can certainly help with the legal language and most are willing to draft in simple, everyday language. If your lawyer is not willing to do this, you may want to find a new lawyer who is more in line with your business goals.

3. There is not enough white space in your contracts. If your contracts open up and show walls and walls of text, you run into the same issue in point 1 above. Your client is going to be overwhelmed and will not read your contract. Insert spaces, proper margins, headers and section numbers into your contracts.

You want your client to come to your contract with an open and calm mind, not frustrated and overwhelmed.

4. You do not have a written contract. If you have set up your business and are offering professional services, your clients expect you to provide them with a contract for your services. The contract sets out the roles, responsibilities and terms. If you do not use contracts with your clients, not only are you putting your business at risk, but you are not standing out as a professional. For example, if I were canvassing photographers to hire for my wedding and one photographer did not have a client contract but the other two did, that would change my opinion of that photographer. Why don’t they have a contract? Are they lazy? Am I going to get what I’m paying for? Why are they different from the others? It would make me question that photographer and ultimately may result in my decision not to move forward with that photographer.

You always want to wow your customers. Getting your contracts in tip-top shape is just one of the many things you can do in order to snag more clients and more money for your bottom line. Remember, your contracts are an extension of your business. Make sure that you put your best foot forward.

Do you have any pet peeves about contracts? Let me know in the comments!

Leave a Reply