Have you ever been burned by a handshake deal? I'm Erin Olson, and I've been there, done that. In this episode of the Quality of Life Podcast, I aim to arm you with the essential knowledge to transform your business agreements from frail handshakes to fortified legal fortresses. I'll lead you through the maze of contractual legal-eze and key clauses, ensuring that the next time you put pen to paper, you're not just crossing T's and dotting I's—you're safeguarding your business dreams.
We'll dissect the anatomy of a solid contract, from the must-have Non-Disclosure Agreements to the often overlooked but critical Exit Clauses. By sharing my hard-earned wisdom and a few battle scars, you'll learn to navigate negotiations like a seasoned pro and keep your business securely anchored in the choppy waters of commerce. Remember, a thorough contract saves a business owner's sanity. Tune in, take notes, and be ready to bulletproof your future dealings.
Be sure to subscribe to the podcast, and share it with someone who could benefit from what you heard. Also, head over to https://theerinolson.com/links and sign up for the email list, and you can get all the downloadable PDFs and tools! News: We finally have a YouTube channel! Visit us HERE: https://youtube.com/@theerinolson?si=xPNSU1-C7Yt9zXgD
Have you ever been burned by a handshake deal? I'm Erin Olson, and I've been there, done that. In this episode of the Quality of Life Podcast, I aim to arm you with the essential knowledge to transform your business agreements from frail handshakes to fortified legal fortresses. I'll lead you through the maze of contractual legal-eze and key clauses, ensuring that the next time you put pen to paper, you're not just crossing T's and dotting I's—you're safeguarding your business dreams.
We'll dissect the anatomy of a solid contract, from the must-have Non-Disclosure Agreements to the often overlooked but critical Exit Clauses. By sharing my hard-earned wisdom and a few battle scars, you'll learn to navigate negotiations like a seasoned pro and keep your business securely anchored in the choppy waters of commerce. Remember, a thorough contract saves a business owner's sanity. Tune in, take notes, and be ready to bulletproof your future dealings.
Be sure to subscribe to the podcast, and share it with someone who could benefit from what you heard. Also, head over to https://theerinolson.com/links and sign up for the email list, and you can get all the downloadable PDFs and tools! News: We finally have a YouTube channel! Visit us HERE: https://youtube.com/@theerinolson?si=xPNSU1-C7Yt9zXgD
See ya next week! Erin
Speaker 1:
Welcome to the Quality of Life podcast. I'm Erin Olson, a wife, a mother and a serial entrepreneur. After starting three successful businesses, I've learned some hard lessons regarding the ins and the outs of starting and running a small business. My intention is to share my knowledge that I've learned from the School of Hard Knocks so you don't have to learn it the hard way like I did Each week, I hope, to guide you to the next level in your business or in the business that you work in. So let's go. Hey guys, welcome back to the Quality of Life Podcast. Erin Olson here to help get you from business idea to big business. You're probably at a stage in your business where you are looking to make some relationships with bigger vendors, suppliers or with employees or even other business contacts, and that is awesome. It's these relationships that ultimately grow your business. If not, that's okay, you will, and this episode is still for you.
Speaker 1:
Today we are talking all about handshakes and contracts. My friend, in all of the businesses that I have owned, I have come across the need to have an agreement that was a little more binding than a handshake. You know, I used to do all of my business with a verbal agreement and shake hands because I know I am a trustworthy person and I believe that a handshake was a contract, and that belief has gotten me burned enough to know that a handshake agreement is great but should always be written up and signed by all parties involved so that all of the terms are agreed upon. So let's talk about some of the contracts and agreements that you probably will come across as a small business owner. Now, I'm not a lawyer, but lawyers are expensive, so I hope to help you out based on my experience, but please contact a lawyer if you don't understand what you're being asked to sign.
Speaker 1:
Protecting yourself as a business owner when entering into contracts and agreements is crucial for the success and the stability of your business. So when you're considering divulging information or signing something, here are some key things to consider. First, you need to understand the contract, read every single word and know what it says. Be sure that all of the terms are clear and that you agree to it. Be careful if there's any verbiage that sounds vague or generalized, because that is a gray area that can be interpreted different by different people. Second, clearly define that the dates, deadlines, goods or services are all specified. Everything that is deliverable by both sides needs to be clearly explained. Third, define any payment terms if necessary. Fourth, termination and exit clause. Okay, this one I learned way later in business than I hope you do.
Speaker 1:
When you have any agreements or contracts that you sign, there needs to be a way out if both parties don't do their part. All contracts. They need to have this, just in case you need to dissolve this agreement. Fifth, you can negotiate. Okay, don't think that a contract can't be negotiated if it's not satisfactory. Okay, when you see a contract, you can refuse to sign it or you can counter it, and it's not written in stone until you sign on the dotted line. So you can negotiate a contract until it is completely sealed and signed. Sixth, keep all copies. Okay, I can't tell you this enough. Keep all copies that you have of every contract and every agreement that you've ever signed. Scan them into your computer for backup, but keep the originals, especially if there is a notarized copy. I can't tell you how many times I have had to go and dig things out of my way back files in the boxes in the closet just to prove that I had an agreement.
Speaker 1:
As you keep those six things in mind, let's cover the most common contracts or agreements that you will probably come across. First is the most important agreement you should definitely know about. It is called the NDA, or non-disclosure agreement, and sometimes it's called a confidentiality agreement. Before you tell anyone about your business ideas or inventions, you need to have one of these on hand to have them signed. This agreement can help protect your proprietary secrets or trade secrets from anyone who has signed one of these NDAs. This is available online through legal websites such as rocketlawyercom or LegalZoom, among others, and, honestly, those are great things to have memberships to so that you can print up purchase agreements and bills of sale and other things that are very common in leases and most things that you could come across as a small business owner. I had an NDA written up by a lawyer years ago and I have found similar ones available online. This is a very important agreement to have signed.
Speaker 1:
Anytime that you talk about your inner business workings that are not public knowledge, any secrets that you tell can be protected by this agreement, and you will likely be asked to sign them if you do work for other companies as well, and when you sign this, asked to sign them if you do work for other companies as well, and when you sign this, depending upon how it is worded, you can't tell anyone the information you are going to talk about Now. There is an important thing to say about an NDA. If you do find out that someone broke the agreement and shared proprietary information you talked about after they signed the NDA, it is very hard to enforce and, honestly, once they share your secrets, you can't make them secret anymore. So, even with a signed NDA, only divulge the information that is necessary to the individual conversation. It is not a license to say anything and everything. It does, however, encourage both parties to be more respectful of all the things said or seen on the property.
Speaker 1:
Now, closely behind the non-disclosure agreement in importance is the non-compete All right. This agreement should be signed by any suppliers, salespeople or employees that you work with. In my opinion, what this agreement does is it keeps whomever signed it from working for or directly competing against you in a specific geographical area for a specific period of time. For example, if your employee John leaves or is terminated, they can't go start a company that competes against you or work for someone who does. This is typically only enforceable for about three years, but it might keep the competition at bay long enough to grow your market share enough if they eventually do go to work for them.
Speaker 1:
Other agreements and contacts you might run into are general business contracts. Like you agree to specifically use a certain company exclusively. Service contracts and purchase agreements are important to have so that you are guaranteed sales in case you need to get financing or to budget for these can also be tough to enforce, but a clause in these that come in handy are the fees that you may collect if they are late in payment or late supplying product or service, or if you are the one providing a product or service, adding a bonus structure if you complete your end of the agreement early. There's this construction company that I know of that wins most bids by being decently priced, but they write into all of their contracts that they get a significant bonus for each day that they are ahead of schedule, which nets them some serious cha-ching.
Speaker 1:
When you start to get equipment or property. Make sure that any lease agreements are completely understood. We once had a landlord that put in the fine print that we were responsible for some of the mechanical in the building that we never used. Another tenant did, and then he tried to stick us with a big bill. That wasn't all he tried to pull over on us. That's why we disaffectionately refer to him as our scumlord. These agreements might also hide an early payment penalty you know to charge you if you pay in full before your terms are done and or a buyout fee if at the end you want to buy the equipment or building. We once did a rent to own on a property that we lived at and did a lot of upgrades. We know the purchase price of the property and in the agreement we should have specified a dollar amount, but instead we put quote fair market price end quote, and because we had done so much work, the owner wanted to charge us more than $150,000 more than he bought it for.
Speaker 1:
I guess the saying no good deed goes unpunished fits in this circumstance, right? Well, I don't usually agree to that kind of thinking, but sometimes it fits. Another kind of agreement that you will probably run across is an employment agreement or an independent contractor agreement with an at-will statement. Anytime you hire someone, you should have a specific list of expectations or job description with an agreement to compensation. The at-will portion means that you can hire or fire them at your will. Be sure to include time off policies and your confidentiality or non-disclosure agreement and termination and severance policies as well. I would also include a non-compete in here as well, just because you don't want somebody to come in and learn all your secrets about everything you do and to go and turn around and turn that into a business that competes with you.
Speaker 1:
This legalistic part of business isn't the most fun, but it can keep you from getting bamboozled. For example, one of the first contracts that we ever had was with a gentleman to do some videos with us for some marketing. He actually suggested that we write something up, so the contract was to do how-to videos for instructions for about 16 products in exchange for about $3,000. Well, as we started to shoot those videos with him and he realized how much we made in sales, he came up with some lame excuse that our videos were really taking way more work than he expected. And to finish the remaining videos that he was contracted for, he needed $8,000 more than what we had agreed upon In writing. When we said no, he acted like a child and we stuck to our guns. We ended up terminating the agreement because we had a termination clause in there and getting all of the raw footage that he had taken to that point. He was compensated for the work that he completed because he did a good job, but it left a real bad taste in our mouths and it ruined an otherwise good relationship because he didn't understand what he signed and it was all his idea.
Speaker 1:
There are many other things that you might run into, especially if you take on partners, but we will have that discussion another time. That is a whole nother episode. The bottom line is pay attention to everything you sign, professionally or personally. It can keep you from getting burned with an early termination fee or to hold your utility company accountable for the upload and download speeds that you were promised. In writing.
Speaker 1:
And in my personal life, I was totally sold on getting new solar for my home in Texas until I was asked to sign a purchase agreement without a dollar amount on it. If that ever happens to you, run away. This company had a clause that they would not tell you how much the solar panels were going to cost until you signed a purchase agreement that was blank and then they could charge you whatever they wanted to. I declined and the sales guy got really pushy. I asked him to leave until he could come up with an actual dollar amount. He couldn't, he said, because until I signed this purchase agreement, they would not send contractors out to give me an estimate. But he supplied a letter stating that I would not be held to the contract if the amount was not satisfactory. Um nope, because that would not null and void what I would have signed. Come to find out they were a company in multiple class action lawsuits for not fulfilling their end of the deal or for charging crazy amounts for solar panels. Wow, I judged a bullet there.
Speaker 1:
When in doubt, get it in writing. End of story. Well, guys, that is what I have for you today. I hope that this helps prepare you for some of the contracts and agreements you might see as a small business owner. Plus, I hope it helps keep you safe from getting burned by unscrupulous business people. I wish we lived in a world where a handshake was as binding as a contract across the board, but some people weren't raised that way, and those that were raised that way can be easy targets. So do your part to protect yourself by getting it in writing and share this episode with all of your friends so they don't get taken advantage of either. Well, guys, thank you so much for listening and I will see you next week on the Quality of Life podcast. See ya. Thanks for listening to today's episode. See ya I N O L S O Ncom. Stay up to date by joining our email newsletter. Together, we can improve all of our quality of life.