Now that your business is up and running, don’t fall in to the same trap as many small companies and forget to manage your paperwork properly.
The resultant legal mess causes small companies £100 billion a year according to the Government. Here are some simple steps to help you grow your business successfully.
1. Contracts with suppliers
Often supply contracts are oral, or just written on the back of an invoice but you need to do better than that. Remember the “4 R’s” of any contract – Risk, Responsibility, Rights and Rewards. Who is responsible for the risk if things go wrong? For example, what would happen if goods get lost or damaged in transit? What obligations do you and the supplier have? What rights do you have in whatever is delivered? How are the rewards calculated and when are they paid?
2. Contracts with distributors
The “4 R’s” apply to distribution contracts too. What responsibilities does the distributor have? What happens if goods are faulty or go missing or are returned or customers don’t pay – who deals with these risks. What rights does the distributor have over your stock or product – are they exclusive? How does the distributor get paid – up front? A fee per unit? A percentage of revenue?
3. Contracts with sales agents
Maybe you are engaging with sales agents, or introducers, or affiliates, or wholesalers. Whoever is selling for you make sure your contracts are clear. What services are to be provided? What does the sales entity have to do in order to get paid for a sale? Are they making sales guarantees? How much do they get paid and when? Can you appoint other sellers at the same time?
4. Contracts with customers
Consumer law at EU and UK level requires you to handle this area with care. Make sure you do not fall foul of legislation governing unfair contract terms, electronic sales or data collection and processing. Find out about your obligations and register under the Data Protection Act as a data collector or processor.
5. Managing disputes as they arise
Sadly disputes arise quite frequently. Don’t go rushing off to court – it’s expensive, stressful and risky. There are other cheaper alternatives including mediation. Mediation is successful 70% of the time, is much cheaper than litigation, normally lasts not more than a day and can preserve a relationship in a way that bitter litigation cannot do.
6. Developing your negotiation skills
Another neglected area. Do you know what the four most common negotiation attitudes are? These are the most common ‘mindsets’ that negotiators bring to the table i.e. how they feel on the inside and what they project on the outside. Or the stages of a negotiation process? Or the common sources of bargaining power? Or the rules of successful bidding? How to break a deadlock? If the answer to any of those questions is “no” then maybe you need to brush up on your negotiation skills, in order to help you grow. After all, almost all growth is based on the deals we negotiate with suppliers, distributors, sales agents and customers.