SME’s

According to Earl Nightingale, famous author and broadcaster “You can measure opportunity with the same yardstick that measures the risk involved. They go together”. He continues, “Wherever there is danger, there lurks opportunity; whenever there is opportunity, there lurks danger. The two are inseparable”.

In many cases, especially with smaller business, (start-up or SME) negotiating with larger organisations, there lives both an opportunity and danger. There is of course an ‘inequality’ in bargaining power. This equality is generally apparent during negotiations. Most large organisations have legal departments and it’s not uncommon for a small company to be pitched into a negotiation involving a corporate legal department.

It’s during these situations that larger organisations may question or request your Terms and Conditions and subsequently changes to your contract or certain clauses omitted. In certain circumstances company contracts are compared and each clause examined individually; this is commonly known as the ‘battle of forms’. Experienced businesses use Terms and Conditions to position themselves professionally with potential clients and outline how they want to do business; for example getting paid, liability, protecting their IP etc. A well drafted contract will also help the business manage risk and ultimately save money by avoiding unnecessary disputes.

The following 5 points are worth remembering before you enter into negotiations;

1/ If you don’t have a set of Terms and Condition, then its leads to the smaller company inevitably following the only contract available, that’s the contract of the larger organisation.

2/ Smaller businesses can readdress the balance when negotiating with a larger player; its how you ask that counts and having Terms and Conditions gives the SME an advantage.

3/ Such negotiations can be tense and feel overwhelming, a company with a niche product or service can be in a powerful bargaining position and not realise it, distracted by events or potential size of the opportunity.

4/ Don’t feel flattered; you will end up working harder for less and obtain less appreciation for doing so, vanity costs money!

5/ Be confident, it’s ok to feel pressured by a larger company’s demands. However the same rules apply when doing business with smaller businesses, if you have the capability to deliver services, it’s profitable for you and the risk and scope can be managed then its worth negotiating or perhaps in certain cases worth walking away.

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The subject of terms and conditions traditionally for Creatives is usually the last issue on their mind. It’s also common for Creatives to acquire someone else’s terms and conditions or write their own contracts. Unfortunately the credibility of these contracts is only tested in times of dispute; so contracts drafted in bullet points format or acquired from an unreliable source generally don’t contain the correct enforceable clauses to assist the business to resolve issues that arise.

Similarly, those many companies who choose to do business on a handshake, as honourable as that sounds, find the frailty of the contract is exposed when a dispute arises, as there is no real legal detail or proper fall back position to solve disputes. Writing down the details of how you’d like to do business is a simple idea and best captured in a contract that is tailored to the relevant business sector and business type.

There seems to be a natural resistance to formality and detail, yet during times of disagreement it’s often the details that will protect a business.

Terms and conditions can be for many Creative businesses a way for outlining ‘how they want their customer to engage with their services, from quotation to completion of the work.

Colin Hardie, Director at Ubisan a web commercialisation business commented, “ Create Ts and Cs listened and managed to distill the more specific elements of my business into a coherent and highly professional set of bespoke terms and conditions…. something that would have been impossible to achieve with an“off the shelf” alternative”.

This also means, outlining your payment terms, the IP ownership and managing scope creep through effective ‘sign off’ processes captured in the Terms and Conditions. All these issues are central to ensuring you get the work done on time and in-line with your Creative business strategy while getting paid, which can assist cashflow and promote sustainablity within the business.

David Atkinson, Director at design agency CO2 Design, said,” Before we got a bespoke set of Ts and Cs, we like many others got a set from the web or looked at others, now we have a ratified contract that communicates clearly with our clients.  Also, we’ve managed to reduce the amount of debt within our business to a level we can manage, which has helped the business”.

Its also common for some potential clients to request a set of Terms and Conditions prior to doing business, if you don’t have a relevant set of Ts and Cs, then you’ll simply accept the terms offered by the client or in some cases run the risk of signing up to a contract which is packed with clauses no one knows the consequences of signing up to! Meaning you get paid and agree to the terms according to the clients terms and conditions.

David McCullough, MD of Urban Niche, a social media marketing business based in Edinburgh commented, “Urban Niche contracted Create Ts and Cs to draft a bespoke set of Terms and Conditions to support our bid for NHS business, I am delighted to say we won the business and believe Create Ts and Cs contributed greatly to our bid and ensured we had the correct commercial contract; helping us to present our business professionally and prepare appropriately for our negotiations”

Having a relevant, sector focused contract in-line with the Creative business is one way of avoiding unnecessary disputes and allows the Creative business owner to concentrate on doing the work they enjoy doing .

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