If part of your business offering is to make something complicated simpler or you have a super slick brand, or simply that your USP is amazing customer service, then might you be undermining your brand by sending out T&Cs which are so full of legal mumbo jumbo that no one can understand them?
Do they really need all the “hereinafters”, “notwithstandings” and “wherefore art thou Romeos”??
Have a look at them and answer honestly if you understand them.. there’s a lot of T&Cs out there that would baffle even the most accomplished lawyer. They can (and generally should) be in plain English.
Better to use them to your advantage and create something you’re proud to send out to your clients or customers – something that sets the tone of what dealing with you will be like, creating a positive first impression, incorporating and extending your branding, simple steps that make a big difference.
Liability – to cap or not to cap
Lawyers often approach liability as something to be avoided at all costs. Exclude and cap it all!!
In this age of improving transparency, some business are choosing to turn the standard approach on its head and are being upfront and open with their clients by expressly stating what they ARE liable for.
Regardless of the approach, check if your liability cap is set at the right level. Does it dovetail with the liability cap your own supplier provides you with? If you are taking on all your client’s risk, should you be pricing your product or service higher? What is reasonably expected in your industry? Being substantially more generous in taking on liability may seem like a way to stand out, but can you afford to do this? What could it cost you if something goes wrong?
And a final thought on liability is to transfer it! The insurance market is much better now at creating new options for all kinds of liabilities. We can introduce you to some great brokers to explore this option.
Make them relevant
If you sell bespoke jewellery or high end shoes, you don’t want your T&Cs to talk about you selling computer software or magazines (this is a true example I came across recently!).
And if you’ve found a template to use, which is quite common, please, please make sure you remove “the blanks” – there is nothing more obvious that it’s a cut and paste job then seeing this: “Communications should be sent to [FILL IN ADDRESS]”.
You should also make sure that any liability you exclude is relevant – does a handbag or jewellery maker really need to exclude liability for lost data or business interruption? That seems more relevant to a data centre operator for example.
This suggests the business can’t be bothered reading its own docs.. So why should the customer..?
It doesn’t send out a good message that you’re scrimping on your contracts – what else might you be cutting corners on??
And whilst we’re talking about shoes… 👇🏼👇🏼👇🏼 still my dream shoes!! Sophia Webster
Add tangible value to your business
T&Cs have another (super)power which is often overlooked – and that is increasing the value of your business.
If you are looking to take investment or sell your business, the investor/purchaser will go through a due diligence process and having robust contracts in place, securing your sales pipeline and your supply chain will add £££ to the valuation.
The more risks there are from a purchaser’s perspective, the lower the value will be.
So where contracts already exist it’s important to make sure they are up-to-date and enforceable, as they will need to withstand the scrutiny of commercial and legal due diligence and signing up new recurring revenue streams to your T&Cs will reassure a buyer that they will inherit a consistent cash flow.
You can then sit back safe in the knowledge your business will fly through its due diligence raising the most money it can!
Don’t forget the all important implementation stage
So now you have T&Cs you’re proud of. Brilliant. ✅ Now you need to make sure they are used properly in the business – how are customers made aware of them? Think about how the T&Cs become part of the contract you make with your customers or clients.
And just like you review other processes in the business, your T&Cs should undergo regular reviews too – there’s the obvious reason of changes in the law (IR35, GDPR…) but your sales process may be improved, you may change your logistics provider or you may be thinking about cashflow finance – all of which would mean your T&Cs could do with being updated.
Hopefully this week’s posts have been helpful and if you think your T&Cs could do with some TLC, then give an Alpaca a shout.
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See, it’s rarely a good idea to simply cut and paste your Ts and Cs from somebody else’s website, even if it just seems like a boring, “tick box” exercise that needs completing. Just because you’ve never been burned by having bad (or no) legal agreements doesn’t make them a bad idea. And yet so many small businesses feel that this is the only way to protect themselves. As you can see above, it usually has the opposite effect, simply confusing your customer.
Geek moment – there is also a legal principle that says if you ever need to try and rely on a clause in court, any ambiguity will be interpreted against you. So you might just find that you’ve made your life harder by trying to find a shortcut.
And yet this doesn’t mean you should spend the earth and months of your life creating the best legal agreement the world has ever seen.
But working with Enlightened SMEs on a daily basis we often find ourselves having to educate clients as to the rationale for these documents. Many are resistant to spending on legal or “compliance” issues, often because (as above) they’ve never been burned.
“I operate on a handshake”, we hear often. Which is lovely, but if your clients or suppliers don’t, then you may find yourself in a pickle. Also, Coronavirus, people, please; handshakes are so 2019.
Trust us, having simple yet robust, fair, clear terms and conditions, contracts with suppliers, shareholders agreements and similar documents is a good idea. I can think of at least three reasons:
1. It makes the sales process easier and stops your sales team answering the same questions every time;
2. It makes you more attractive to investors, as they can see you take governance seriously; and
3. It might just save you thousands in legal fees or disputes down the line.
It may seem painful to invest a few thousand pounds to get these right upfront but the cost of getting them wrong almost always outweighs the investment.
So often we speak to clients who are having trouble with wastage, returns, unpaid debts or internal disputes who don’t realise that these issues would never have materialised if decent contracts were in place upfront.
Similarly, I’ve lost count of the times I’ve worked with business owners who have been pushed out of their own companies because they failed to have a shareholders agreement and could not then believe that they had no rights or ability to stop the other shareholders “ganging up” to vote them off the Board. Tens of thousands in legal fees later, they end up starting again with no reward for years of hard work.
Work out the value to you of having these in place. If you sell a hundred thousand widgets a day at pennies a pop, and your returns are less than 0.01%, you might be pretty relaxed about your terms and conditions. On the other hand if you sell a more bespoke product (or service) and the cost of getting it wrong runs into the tens of thousands, then surely it’s worth investing a little now to save a headache later on.
You want an analogy – imagine you’re buying a house. The survey is an expense you could do without, as are the legal searches. But do you really want to take the risk that the roof is rotten, the walls have dry rot and the driveway belongs to your neighbour ? Copying the searches from the last house you bought, because that went well and you never had a problem, isn’t going to help.
Same applies with your business.
A shameless plug for Alpaca ?
Well sure, we can help you sort this stuff but it’s just part of what we do. We’re not a law firm so we don’t HAVE to make our money selling you complicated legal solutions. We’d rather work out what protection you really need and tailor it to suit. But speak to your favourite lawyer if you prefer. If money really is too tight to mention (contemporary music reference there, for those paying attention), go online to a site like Legalzoom and have a crack yourself, but make sure they’re done with YOUR business in mind. It’s way better than having nothing and almost certainly more helpful than simply cutting and pasting from another company.
How do we convince clients that the documents are necessary ?
Frankly, often we don’t. We accept that the clients may never really care about them. Instead of getting all precious about our lovely legal agreements, we focus our client’s attention on the dramatic impact we can have on their profit line and simply make it a function of our Growth Programme to quietly take care of the compliance stuff in the background.
Basically we engage them with really exciting sales plans, we open doors to new clients, we return them huge great wedges of cash through R&D management and cost savings, and then use some of that free cash to deliver a compliance regime that makes them a scalable business.
Alpaca: Growing ESMEs since 2015*
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