Posts Tagged "Contract"

Contract and Commission Businesses

Posted by on Sep 14, 2011 in Analysis, Behavior, Business, Communication, Contract, Information, Models, Needs, Networks, Planning, Promotion, Purpose, Structure, Systems | 4 comments

When you think of people working on a contract or commission basis, you often think of people who agree to work for some large firm at a particular rate and the large firm does the marketing and administration for the business.

The types of roles that fall within this category of businesses include:

And hundreds of other self-employed business owners with a large client paying regular fees and driving business to them

Over the last 20 years, the large utility companies, telcos, wholesalers and freighters have cut their payroll and put their many of their former staff onto service contracts.

This has meant that there are now hundreds more small business owners who contract their services to the company. Often they have bought their own vehicles and tools and but their brand is determined by a larger company. That company sends them business. A contract exists.

Often what happens though is there is a cancellation clause or a clause that allows the company to renegotiate either the volume of business they will send the contractors  or the price they will pay for services. When the company changes the way they do business with the contractor, the contractors business can change dramatically and the owner can suddenly find themselves with debts but little income. 

Commission agents are at the mercy of the large company in a similar way and it is critical that when they set up as agents they understand that they are setting up their own business. An agent needs to set up in such a way that if the company changes the terms of the agreement, they can survive the change and meet their personal obligations.

What many contractors and commission people seem to believe is that they are employed. Often they are told that the only thing that changes is the contract but it is just like being employed.

Under the contract they have more tax deductions now because they can claim – vehicle, phone, home office, etc as their expenses against income. In many cases, the income looks like a salary increase. Then one day the contractor gets sick or takes a holiday and suddenly their is no income coming from the business. And then the reality of what they agreed to hits the contractor and commission agent.

So a word of warning to anyone being offered a contract by a large company restructuring…

They want you to open your own business and you need to operate as a business not as an employee.

So learn how to run a business.

Get your mindset right before you sign those contracts.

And get BUSINESS advice as well as legal advice before you sign the contract.

And if you need help, ASK. Business mentors have experience with this type of contract work in setting-up a business.

Roberta

Simplifier, Presenter, Business Mentor

 

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#20 The legals

Posted by on Jul 20, 2011 in Budgets, Business, Buyer Experience, Contract, Operations, Systems | 0 comments

If you did the exercise yesterday, you have started to form a picture of who will pay you what rate for what product or services.

Unfortunately, there are rules and regulations around how you offer that service, what you promise, the words you use.

So today you need to take a quick course in Business Law 101. This means that you need to find out something about contracts and terms of trade. 

A contract is an agreement between two or more people to do something. Once upon a time a contract could be done with the shake of hands but as more people forgot what each side committed to we moved to written contracts where it is clearly stated what each side would do.

As the provider, your side of the contract states what you will provide and in what time frame. The contract also states when and how you will get paid for your delivery. And a good contract contains information on what happens if either side does not deliver what was promised. 

A simple contract is always best and this is why many people like dealing with product because what you see is what you get. But, this is not always true and so most countries now have consumer laws that protect against shoddy merchandise or goods what fail to last a reasonable time, consumer laws. You need to find out about your local consumer laws and how they will impact your sales.

Today, you will work out your terms of trade. You will create a simple contract. You don’t need a lawyer to draw this up but if you are dealing with complex situations or high dollar items, you might want to get a lawyer involved.

A contract has your name, address and the name and address of the person you are dealing with. It has what you will provide and a time frame. It agrees a price and a payment timetable and it has some simple consequences should either side breach the conditions stated. It should have a cancellation clause, dates and it must be signed by both parties. 

You are nearly ready to set up your sound business, so keep going. 

And that can be the greatest challenge for any business owner.

 

Roberta

Simplifier, Presenter, Mentor

This blog is part of the 30 minutes 4 30 days successful business start-up

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