How to Use Contracts to Improve Your Business

When running a business, you need to make sure that you put contracts in place to define your relationships with other parties, including contractors, suppliers, vendors, and strategic partnerships with other businesses. As such, you need to make sure that your contracts allow you to get the most out of the relationship possible and are created to an agreed-upon standard. When creating contracts, you need to make sure that the deals that make are equitable. Using contracts to define and govern these relationships will help to make your business more resilient and ready to work for the long-term. With that in mind, here is how you can use your contracts to improve your business and help it thrive for years to come.  

Build Customer Trust with Contracts

The contract negotiation phase of the contract lifecycle is not actually the first step. If using a full contract lifecycle management process, you need to start with template creation. Using templates that are both standardized and legally sound will show that you respect your customer and aren’t trying to catch them in onerous terms with a tenuously legal contract. This can be from everything to contracts for services such as a law firm or marketing agency or even a contract between a landlord and a tenant. With respect to your customers, you should have a sense of what the working relationship between you and the customer will be. Your customers will thank you knowing that your contracts are fair and simple.

More than anything, customers appreciate clarity. This is especially the case when it comes to your contracts, as a standardized agreement for each type of customer relationship will help to speed up the negotiation process and also make your customers feel as though they are getting a fair deal. Doing this will also make it easier to keep your customer happy. When using contracts to build trust, customers will have a better idea of exactly what to expect when purchasing from your business, especially if they are contracting you for ongoing services. These can be measured through KPIs which can then be measured for success using contract lifecycle management. 

Use Contracts to Revise Relationships

Setting terms in your contracts is not just useful to the customer you are doing business with. It is also useful to your business. Having clear contract terms is extremely important, as these can be evaluated no matter what the relationship is. For example, if you are working with a supplier, contract terms should clearly state when the supplies should arrive on at least a quarterly basis and what will happen in the event of delays. You may find that you negotiated a contract that does not account for a lack of delivery. As such, you need to use your contracts to continually renegotiate and redefine your relationships, whether they are with customers or with other businesses.

If a contract is not performing as expected, it is important to renegotiate as soon as possible. Doing so will help you keep tabs on the relationship and also hold both the both party and your own business accountable for any deliverables that are stated in the contract. It is also important to see whether a contract performs as anticipated and to make sure that an equitable resolution can be reached if the contract does not perform as anticipated.