The most crucial aspect of any business contract often goes unnoticed until it's too late. Many entrepreneurs find their business growth stunted due to overlooking this critical detail. This article aims to shed light on this often overlooked aspect of business contracts and how it can significantly impact your business.
Entrepreneurs are always in a hurry to expand their business. Staying ahead of the competition requires speed and a constant eye on the next deal. Whether it's software licensing, advertising contracts, link exchange agreements, service contracts, or consulting arrangements, these are the lifeblood of your business. However, in the rush to grow and secure the deal, one crucial detail often gets overlooked. The focus is usually on two questions: "What do I have to do, and what do I get?" But there's another question that needs to be asked.
This question applies to both the contracts you sign and the ones you have your customers sign. It doesn't matter if it's a one-page agreement or a forty-page contract in ten-point print. The question is: "What is the way out?"
Exit strategies are often the last thing on anyone's mind when signing a contract. The focus is usually on securing the deal, not on how to exit it. However, we've all heard stories of businesses trapped in contracts they can't escape. Whether it's a hosting service locking them into a multi-year contract or being obligated to supply a good or service at an unprofitably low price, these situations can be detrimental to a business.
It's essential not to turn down business opportunities, but it's equally important to protect your interests. While involving a lawyer can sometimes complicate matters, creating an escape hatch for emergencies is a prudent move.
Asking the critical question, "How do I get out of this if things turn sour?" can also provide a strategic advantage. If you're uncomfortable with the exit clause, you can use it to your advantage. Suggest a subtle change in the wording. The other party, eager to close the deal, will likely agree to the change if it doesn't seem too drastic.
In a future article, I will discuss guerilla tactics to modify the terms of those "Sorry I can't change it" preprinted form contracts that people often make you sign. For more information on business contracts, you can visit Harvard Business Review or Entrepreneur.
