If you own a small business, you have probably entered into a contract with a consultant.
Recently I had the pleasure of interviewing Linda Lopeke, owner of SMARTSTART, as well as a philanthropist. She incorporated her consulting practice in the early eighties and co-founded SMARTSTART Giving, a philanthropic initiative that benefits entrepreneurs around the world, after a personal meeting with President Clinton in 2007.
Linda told me that most people don’t realize that every consulting agreement should contain a minimum of nine elements. If those elements aren’t included, you will probably not have a successful result.
Here are the minimum nine elements that must be included in every consulting agreement:
1. What will be done (the statement of work which may/may not include the method for how it will be done)
2. When it will be recognized as having been done (the success measures or deliverables agreed to)
3. The timelines agreed to for starting and finishing the work and completing key tasks or deliverables (these are the milestones, due dates, and the tangible form the work will take. For example – 6 coaching sessions booked in a 90 day period or a functional web site with x, y, z elements)
4. The consideration and payment terms (how much, when payment is due, who covers expenses and how will they be invoiced/approved, what form payment will be in, what must exist as proof payment is due, and any associated restrictions or penalties)
5. Ownership and accountability (ownership of problems and issues and their escalation, of resources, access and tools needed, of status reporting and communication, of the completed work)
6. Disclaimers and provisions for errors and omissions
7. Cancellation terms and notice required
8. Names of the authorized parties representing both sides of the contract, and contact information
9. Date of contract
This information was excerpted from a teleseminar titled “Creating Flawless Consulting and Coaching Relationships.”
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About the Author: Margie Zable Fisher is the President of Zable Fisher Public Relations, a small business public relations firm, and is the publisher of Women Business Owners Digest (www.wbodigest.com). She offers free award-winning Public Relations tips at www.zfpr.com.
Great list… the one that is most important is the statement of work… I find most folks enter into an agreement with enthusiasm and really don’t take the time to fully outline what will be delivered. This leads to misunderstandings.
One way to avoid this… is scope the work and then plan a quick review/adjustment meeting within the first week or two. After spending some time on the project both the consultant and the company have some experience as to what really will/can be done.
Clarifying the scope & deliverables after this initial time will go a long way to ensure the final project meets everyone’s expectations.
Along the same lines… it’s important for the consultant and company to have appropriate “sink and stablize” meetings. Set as part of the steps above, appropriate dates to review progress to date and make any adjustments that makes sense.
Great list. It’s so important that both sides are completely clear on terms before starting to work together. And having it in writing is best!
I’ve seen a few contracts in my day and I’m usually amazed at how large they become after legal gets their say on things. So my question to you Margie is this: Would you consider a contract sufficient if these factors were spelled out in plain English, devoid of all the legal mumbo-jumbo?
Really good checklist of things to keep in mind. The Golden Rule for me in starting up new projects is ‘Communicate communicate communicate.’ You can’t talk too much, and making sure that every detail is clear, every question answered, every qualm assuaged, can really make the relationship pleasant (rather than running the risk of it becoming stressful).
Another thing that probably should be added to the list is a description of how disagreements will be handled? Will they be mediated? Do we jump right into court? Does the payee have the right to demand money back? Which jurisdiction has legal preeminence?
Hopefully it will never be needed, but if it is the description can be very helpful.
I’d add a important tenth item:
10. Clear methodology and rates for modifications to the original agreement.
Nearly every agreement is extended, expanded or otherwise modified. It’s vital to agree up front how this is done, the availability and willingness of both parties for such modifications, of and what rates will apply.
Really great and simple list. Many contracts get so complicated they fail in the KISS principle. This list is a great ready reckoner for any small business
Great list. I’d also add a confidentiality agreement as #11 (I agree with Keith Delong that his #10 is necessary: “10. Clear methodology and rates for modifications to the original agreement.” — there are always changes and you need to agree upfront on who will pay for those changes.