Business owners sign lots of contracts. Utilities, loans, rental agreements, vendor agreements, etc. You should always READ these agreements before you sign them. But today’s tip focuses on an additional step – now that time has passed and the contract is in full swing, I want you to re-read them.
I get it – you were in a hurry when you signed the original contract, so you didn’t fully read it. Although I get it, I don’t agree with it. It’s very important to understand contracts. I know many business owners sign things blindly and intend to read the contract in detail later. Guess what? Later is here. I can’t go back in time and ask you to fully review old contracts before you signed them – but I can advise you to re-read them now.
Here are a few examples of contract surprises that I see OVER and OVER again.
- You took out a revolving loan at a bank a few years ago. Your required payments have been interest-only. Suddenly, the bank sends you a bill outlining your “new payment terms” based on the loan conversion to principal and interest – fully amortizing over the next 5 years. Your payment has quadrupled. You aren’t prepared. First you call the bank in a panic. Then you re-read your contract. As it turns out, this is a normal part of the agreement that you signed years ago. It’s right there in black and white. As you read it, you remember that you agreed to this. But you had forgotten.
- You are leasing space in an office building. You decide to relocate to larger/smaller space. You give your landlord notice. Your landlord informs you that your lease does not expire for another 2 years. You’ve already signed a new lease in the new space and put down a deposit…. You completely forgot about the terms of your existing lease.
- You decide to switch utility companies – electricity, internet, phone, garbage, whatever. You spend hours negotiating with potential utility companies to get the best price. You are looking forward to the hundreds of dollars you expect to save after switching to the new utility company. But when you call to cancel with the old company, they politely inform you that you are locked into a long-term contract and cancelling early will result in costly penalties.
Don’t let these things surprise you. Re-read your contracts. Be prepared before you make major decisions for your company. If you have any questions about the contract, or feel something was misrepresented, call your attorney for assistance. But most contract issues I see are the result of the business owner forgetting about what he/she signed. Re-reading your contracts can remind you of your obligations and allow you to be better prepared.
4 Oranges is committed to bringing you weekly tips in the form of To-Do List items that you can complete in an hour or less. These tips were generated from reviewing best practices from the hundreds of businesses I’ve worked with over the past 15 years. I expect you’re already doing some (but not all) of them. Improve your business by making quick fixes that have long-lasting results.
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