Written Agreements – Legal issues that can undermine your business performance

Sales and quality of product or service are always on the forefront of your business mind. But unaddressed legal issues can undermine your business performance.

Today’s issue_

Do you have a written agreement with your partners?

Without a written agreement there is vagueness.

Why don’t you have an agreement?

In my experience, I see business owners who are so busy trying to make the business a success but do not realize that the agreement is most critical for their long term success. Also, I see many who are afraid to confront the issues with their partners and prefer the vagueness, hallucinating that everything will work out.

The best business arrangements are those where all the issues can be discussed. If the other guy is going to blow up if you raise an issue or you are afraid he will pick up and leave if you expose your real agenda then the chances of long term business success are close to zero.

How will the lack of an agreement hinder your business performance?

I have seen businesses with many millions in revenue without written agreements – from an investor’s perspective they don’t look like serious business players. Also, once investors arrive on the scene, the business owners are at a disadvantage if they don’t have an existing agreement, because the investors will write it for them – at the business owners’ expense but on the investors’ terms.

If you have a dispute with your partners, without a written agreement a judge will listen to all the partners and make a decision that most appeals to the judge, not you.

The process of writing an agreement forces you to think through all the issues and scenarios. Without it, there will be many many situations which you have not contemplated and the situation can be rife with disagreements, expecially when there is a lot of money at stake.

The actual agreement gives you and your family rights. If you die without a written agreement, how will your spouse and children ever prove what you were really entitled to. While your partners may be the most honest people you know, your vagueness and your family’s even greater vagueness and stress will put them at a severe disadvantage.

If you realize that this issue is unattended to in your business, consider the cost to you if this is not resolved and make some time in your schedule to take action.