The importance of small business contracts

And why you should treat your friends like ordinary customers

Tonight I had an angry friend on the phone. “I had screwed her over” by canceling the spaces for my two children at the next block of her forest school, very last minute. The truth was, I had completely missed the deadline for signup (my fault), and then when the reminder came, my kids both said they didn’t want to continue. Of course, my friend was annoyed, as she had lost income she assumed she had. She now didn’t have time left to fill two empty spots. So I felt awful, and she, well she admitted that she should have treated me like any other customer, and pushed me harder on deadlines and confirmations. This post is about why small business contracts and written agreements are vital, also for friends.

Small business contracts and signed agreements are essential. Assuming and trusting will bite you in business.

You business woman signing small business contract

Set your boundaries to protect your cash-flow and your client relationship

As creatives and small business owners, we are often too soft. We want to be friendly with everyone. We treat our clients as our mates, and keep everything warm and lovely.

And while this works in many cases, and we don’t want to be coming across as cold hard businessmen, when it comes to running a business, you’ve got to be firm. Even with mates. It is worse falling out over money afterwards than being firm upfront.

Friends and family often expect a different treatment: discounts, extra time, or even free services. No problem if you are feeling generous or they are giving you a lot of support or recommendations in return…but it can get out of hand. You are not a charity!

Setting boundaries is healthy – even essential – for your sanity, energy levels and for your bank balance. Have a small business contract signed on price and expectations beforehand.

woman holding black dslr camera
Photo by on

Send realistic quotes to cover enough time

A photographer client of mine recently had a job to shoot a holiday let accommodation. He had quoted the guy his normal rate, which was accepted, but when he arrived at the location, he quickly realised the house was much bigger than he expected. The shoot took many more hours therefore, and more photographs were needed.

However, that wasn’t agreed in advance.

So when he ended up editing the images, spending many more hours than he thought…he felt annoyed. He emailed his client, explaining to him the uncomfortable situation he was in, and asked to increase the fee to make up for the extra time. His client however got back saying that this wasn’t agreed, and refused to pay the difference. An awkward moment which could have been avoided.

My photographer client ended up absorbing the additional time spent, and swallowing his losses, just because he wanted to keep a good relationship with this client. But left him feeling like he had just done a job for free.

Lesson learnt? Know in advance what the scope of a job is, and don’t be too quick with sending out quotes. It is much harder to ask for more money afterwards than if it is agreed beforehand.

Get written small business contracts between you and your clients that explain clearly what the expectations are on both sides, how many hours are included, and the price of any additional hours or services. Clear communication is key for growing your business, and keeping both yourself and your clients happy.

green grass on forest
Photo by Rudolf Jakkel on

You can still be friends, just be firm when it comes to payment

It is hard running a small business, and you don’t want to come across as aggressive shoving contracts under people’s noses, when, most of the time, it’s just us and our one-woman show. But experience and examples keep showing how important it is to be clear with clients.

I have been guilty of it myself, giving people more time to pay, and then having to chase them up. Or being in the awkward moment where a friend or family member assumes that your service is free because they know you, after which you then have to name the price – or feel taken advantage by.

Just because your friends are clients, does not mean you treat them any different from other customers. Signed agreements, clear expectations, reminders. You don’t need to justify yourself for this at all. You are running a business, and your cash-flow is vital. Do not ever feel guilty about this.

And my friend who gave me an ear-full on the phone tonight? I have just got back to her to say my sons are staying another block of forest school. As a small business coach, I am the last person who wants to screw over a fellow hard-working entrepreneur.

creative business coach

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