Your terms of business must suit YOUR business
“Never Re-invent the wheel” was the advice I was given when I started in business. And that’s a great adage which I still use today. But if you are looking for a wheel for your car, you don’t go to the local cycle shop. That’s what some people do when it comes to their terms of business – copy those of another business and then realise (when it is too late) that they are completely unsuitable.

Your terms of business is the most important document in your business. It dictates how you interact with your customers…and it’s your customers that make you money. Get your terms of business wrong and you end up with the biggest problem for most small to medium sized businesses – poor cash-flow.

And, if you think that cash-flow isn’t bad enough, you then realise that you are exposed to unnecessary law suits because you haven’t excluded liability for certain events and have no remedies for chasing those late payers.

Think about it: how many customer transactions do you have a year? What is their value? With things figures in mind, do you think it is worth investing a little bit of effort to get your terms of business right?

Effort means working out what you need first

If you wouldn’t put a bicycle wheel on a car, then you wouldn’t use just any old terms of business as your own. First, you need to understand the nature of your business. Is it the same as the business whose terms you are copying? Invariably the answer will be no – that’s because all businesses are different and have their own special requirements.

There are many different types of business. Some sell products, some sell services. Others don’t sell at all, but hire products out. Some deal exclusively with consumers others exclusively with business clients. Some operate internationally, others simply domestically. All these factors will effect what goes in the terms of business. Get it wrong and it would be like driving your car with one wheel smaller than the others – it will sure be a bumpy ride!

Why you can’t copy your competition

The obvious answer to this problem would be to copy your competition’s terms of business – after all, they have the same terms of business as you, right? Well, maybe, but not necessarily. As a competitor, you will want to differentiate yourself from your competition. That differentiation may reflect in your terms of business. If you have the same terms of business, then you run the risk of being the same. But, that’s not the most important reason you shouldn’t copy.

Never copy something that is broken

If you are going to copy your competition’s terms of business, you need to be very sure that those terms of business are working well for their business. But, how can you be sure that those terms of business are doing just that? The answer is that you can’t. Therefore, it is better than you simply don’t copy. Instead, work out what you will need to make your business work efficiently.

How to work out what you need

Working out what you need to put in your terms of business requires some analysis of how your business operates. You need to look into the future and say “What if such and such happened…” That’s because your terms of business are their most important when things go wrong with a customer. If something goes wrong with your service or your customer, what are the comebacks?

Only by doing this analysis will you get it right. If you copy, you short circuit this process and miss out on valuable lessons about how your business really works. Worse still, you end up with a wheel that doesn’t fit which will inevitably lead to a very bumpy ride!

Need Help putting together your terms of business? Download the Terms of Business checklist

The checklist has been specifically designed to allow you to work out what you need to have in your terms of business. It guides you through the process of working out how you will deal with your clients and most importantly how you will get paid on time. The checklist is FREE and you can download by clicking here.