7 tips of Contract Management for Entrepreneurs
The following Contract Management Tips could be used by entrepreneurs to ensure, that all potential gaps in contract management work are closed…
Investopedia.com says, “An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.
Entrepreneurs play a key role in any economy, using the skills and initiative necessary to anticipate needs and bring good new ideas to the market. Entrepreneurs who prove to be successful in taking on the risks of a start-up are rewarded with profits, fame, and continued growth opportunities. Those who fail, suffer losses and become less prevalent in the markets.”
From my perspective, there are a few keywords that could be highlighted in the definition above. Without prejudice to the business area, you are operating in, to ensure that you always handle the paperwork properly is very important. Both your venture and yourself, in particular, should be protected properly when entering into relationships with internal and external stakeholders, employees and other entities. There is an answer to the question “why effective and well-written contracts are incredibly important for entrepreneurs.”
The following Contract Management Tips could be used by entrepreneurs to ensure, that all potential gaps in contract management work are closed:
Understand your targets from each contract.
You should be very clear about the purposes you need a contract, results you want to get by its expiration date. Only such kind of understanding will allow entrepreneurs to write contractual provisions for maximum efficiency as commercial as operational, protect from potentially risky scenarios. It is recommended to develop a contracting strategy or contracting quilt to guarantee that all activities are covered and managed by separate contracts.
Make sure that the contract covers all aspects.
The next step is to carefully create contracts that will cover all the bases you need them to without any wick spots which could prove problematic in the contract’s implementation. When working with other parties (or with your team before) on contract drafting, you should ensure that subject matter, obligations, payment terms, general and specific requirements, performance indicators, and all other expectations are envisaged by the contract provisions.
Keep the right for yourself to terminate a contract.
Do not forget to give yourself a way out of contracts, in case things will go bad. You may have a good existing relationship with the other parties, both economic and political environments are stable, but you never know when things could take a negative turn, or when your situation may change. That’s why clauses regarding contract termination should be included to determine factors, which allow both parties to annul the contract.
Set contracts Procedure.
Clear contract management process is very important for all its participants. Its always better to set internal procedures in place to describe step-by-step instructions on how new contracts should be created and current ones — managed. Such procedures should cover both pre-award and post-award stages of contract cycles: from contract request — till close-out. Try to specify in detail in your procedures: who needs to sign off on contracts, which templates to use for which situations, audit, reporting and renewal stages.
Do kick-off meetings with other parties.
When you have just formally entered into the contract, the best thing to start from is “to dot the I’s and cross the t’s” by arranging a separate kick-off meeting. How the contract will work, how parties are going to carry out obligations under the contracts, technical and organizational aspects are usually should be discussed and presented at such kind of meetings. It is always better to have a clear mutual understanding at the beginning than waste time, money and other resources in the latest stages if any uncertainties and obstacles will take place.
Do regular contract review.
Contract management could be divided into two separate stages: pre-award and post-award. Since the contract has been put in place, you are in the post-award stage. To manage the contract successfully without regular follow up over the term of the contract is difficult and, to be honest, impossible. Such follow up may include, for instance, checking of parties’ implementation of their commitments, progress, schedule, negotiation of variations, if any. By doing this, you will be able to identify problems and any likely issues with due dates or other deliverables and, as a result, keep it by variation accordingly.
Do close-out of the contract carefully.
When the contract is not effective anymore, it means the end date has come or it was terminated, some actions to close out the contract better to implement. Both parties should be ensured that all obligations, including financial, upon the date have been implemented and no other additional claims could arise out further. Some parties in terms of big contracts even sign relevant acts accordingly proved that the contract is closed and no further rights to the further claims they will have. If you specified in the contract such provision like guarantee period after main works or services implementation, better if close-out procedure will be carried out after this period. Do not forget to provide feedback for the other party and do lessons learned.
