When it comes to business, your motto should be “trust no one.” This is not to say that everyone and every other business you work with are looking to screw you over or get away with highway robbery. The business world is complicated and very unpredictable. Not having implementations in place that protect you and your business as much as possible is dangerous.
The easiest example to give is in a sales contract you expect your customer to pay you. But what happens if they don’t pay you? Before you jump to the conclusion that you “trust” you customers to pay you, most businesses eventually run into customers or clients that are not 100% happy with what they received, or what they received doesn’t do what they want, or they think because you have a great relationship with them they can put you to end of the line of bills that need to get paid. Simple provisions in the sales contract can ensure payment even if you have to file a lawsuit.
There is any number of situations that “trust” can cause issues. Employees or former employees have access to trade secrets. They might be the nicest people in the world but they need to make a living too and if that information gives them a leg up most will use that information. Payment terms or valuation terms can often become very convoluted the closer to time of payment if they are not defined early in the relationship. Length of relationship, scope of the work, who is responsible for unforeseen issues, and so much more can cause issues and cost money. If these things are defined and laid out before the relationship starts then they are non-issues. When business is done “on a handshake” is when they can easily become an issue.
Most West Michigan small businesses and entrepreneurs can’t afford major hiccups in their operations. Unforeseen issues can costs thousands of dollars if not more. When there is a well-defined contract and less of an informal relationship, the less chance there is for those types of issues to arise. It’s a lot easier to point to a clause in a contract to guide how a situation will go then it is to try and sit down and come to a mutual agreement on it. And if it goes before a judge to resolve that is going to be a larger financial impact. The bottom line is if someone or a business is really trustworthy then they will be more than willing to put the terms in writing. This is just another reason why a good relationship with your small business lawyer can make you money by quickly drafting contracts to protect your business.