B2B Contracts Don’t Work in a B2C World

“Rabo Bank” by bertknot from Flickr (Creative Commons License)

Over the years, I’ve seen a number of entrepreneurs try to adapt a B2B contract template to use in their B2C business.* This is like using a hammer to tune a piano – they’re using the wrong tool for the job. I just doesn’t work. Entrepreneurs who have B2B clients or B2C clients have similar needs when it comes to their service contracts, but the nature of the relationships are drastically different. (The reverse is also true – don’t try to adapt a B2C contract for use with B2B clients.) There are several reasons to not use a B2B contract with B2C clients:

You’re Going to Scare Your Clients
If your clients are Joe Average people, not entrepreneurs, a heavy-duty business contract is going to scare the bejezus out of them. I would be worried that they will be intimidated or confused by the verbiage.

A contract is a relationship management document. The purpose is to put everyone involved on the same page. Ideally, your contract will have all terms outlined in a single document so that either side can refer to it when they have a question. And contracts don’t have to be in legalese to be effective; I recommend using plain English and keeping the terms short and simple whenever possible. The goal is to prevent confusion, not create it.

A well-written contract can build rapport with your client. An effective contract will lay out the value you’re giving them and provide security in regards to how you perform the scope of work. A poorly-written or confusing contract may make a client apprehensive about hiring you.

Unnecessary Provisions
There are provisions that may be essential in a B2B contract that would be absurd to include in a B2C contract template, such as an independent contractor provision. I’m pretty sure the Smith family knows when they hired you to take their portrait, that they knew they weren’t hiring you as an employee. Likewise, non-solicitation and non-compete agreement would be bizarre in a contract for consumers. The nature of the relationship often doesn’t warrant provisions like this.

When I write a contract template (B2B or B2C), I start by trying to envision the full relationship between the parties, how they’re going to interact, what each side is giving and receiving from the relationship, and what my client’s pain points and concerns are. That gives me a starting point for writing an effective contract that fits their needs and addresses common problems in advance.

The Value of B2B Contracts for B2C Companies
There’s nothing wrong with an entrepreneur using a B2B contract as part of their research for what they might need for their business. It can provide ideas for what terms or phrasing they may want to use. Additionally, there are some terms that are frequently found in B2B and B2C contracts, such as scope of work, payment, intellectual property, and dispute resolution. Note: even when the headings in the contracts are similar, how the provisions are written may vary vastly based on the needs of the situation where they are used.

If you need a contract for your business, don’t just use a contract from a fellow entrepreneur. Instead, if you get a template, have a lawyer review it to make sure its suitable for your needs. They can also fill in gaps in your provisions and ask questions you didn’t think to consider. And if you have business that does B2B and B2C work, consider using different contract templates to suit the needs of your clients.

A contract template is an investment in your business. If you sign a contract and later regret it, you may be stuck in that situation. If you have questions about your contract needs, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

*B2B = Business to Business
B2C = Business to Consumer

Affordable Legal Services for New Business Owners

One Upon a Time . . . a Direct Line to the President of the United States by AGeekMom from Flickr

One Upon a Time . . . a Direct Line to the President of the United States by AGeekMom from Flickr

Some of the lessons I’ve learned in my first year as an attorney is that a lot of entrepreneurs, especially those who are operating on a shoestring budget, don’t seek out legal services when they start their business. There seems to be three main reasons why a new business owner does this:

  1. They think it’s too expensive.
  2. They are afraid it’s going to be complicated.
  3. They don’t understand the legalities of starting a business.

None of these are valid reasons for not calling a business attorney.

I recently attended a business seminar where a young man admitted he put off creating a business entity for years because he thought it was going to be hard. He was blown away by how easy it was. His fear put him at serious risk because until he created an entity, he could have lost his personal assets if the business was found liable for causing damage to someone because he didn’t have an entity that separated the business’ assets from his personal assets.

Before you assume you can’t afford legal services, call an attorney and ask what you need and what it will cost. Even if you can’t afford everything a lawyer could do for you, a lawyer who understands your situation will work with you and your budget. They will tell you what you can do on your own and likely provide resources to help you do it. They can tell you when it’s worth it to pay an attorney to do something for you, and the ramifications you could face if you don’t.

When you can’t afford to have your attorney draft a document for you, ask them if you could purchase a consultation to discuss how you could do it yourself or if you could draft it yourself and pay them to review it. There will be times when it’s cheaper and better use of your time to hire an attorney to draft the document from scratch than to try to write the first draft yourself. Call the attorney you’d hire to review the documents first to make sure that’s going to the best course of action. It might be more expensive to fix what you wrote.

There may also be organizations that provide cheap or free classes and consultations for business owners in your community. I spend three hours on the first Monday of the month providing free legal mentoring at Gangplank in Chandler. These services are a great way to get your needs met while keeping you within your budget or to free up more of your budget to afford your business’ legal needs.

If you’re a new business owner or thinking of starting a business, please call a business attorney in your community to discuss your legal needs. I’ve worked with enough clients to know that it’s easier and cheaper to do things right the first time than to clean up the mess that results when you don’t.

You can connect with me via TwitterGoogle+FacebookYouTube, and LinkedIn, or you can email me.
Please visit my homepage for more information about Carter Law Firm.