CONGRATULATIONS! You have officially made the decision to become an online business owner. Whether you are a coach, consultant, website designer, or other similar service provider, your business (no matter how big or small!) must play by certain rules.
So often I hear business owners confess that they haven’t done anything to ensure their business is legally compliant – either out of fear, confusion about where to start, assumption that it will be expensive, or mistaken belief that they can use something free they find online / draft something themselves and it will be just as good.
In general, contracts will do 3 things for your business:
- Create CLARITY and TRANSPARENCY between you and your client, customer, or contractor. The #1 reason relationships go south in our industry is that a client or customer misunderstood the deliverables of a coaching program or course. This is largely preventable by ensuring the client or customer has access to a well-written, clear agreement that outlines all details of the specific program they are purchasing, as well as pricing, details on payment plans, and what happens if they fail to pay, one party wishes to cancel early, etc. Outlining these potential issues ahead of time will serve you SO WELL later, and actually save you a LOT of money, time, and stress.
- Help ensure your business is protected, no matter what. How often do you hear someone say they are in a legal battle or issue that they totally saw coming and fully anticipated? NO WAY, right? It’s always something you assume will *never* happen, from the people you *never* expect. I’m also guessing not many of us anticipated the worldwide pandemic and general cluster that is 2020?? (especially for those of you who depend on live event income) Many are realizing after the fact that having provisions in their agreements that address things like pandemics, earthquakes, and other “acts of God” that would prevent performance but are not your fault are actually relevant and necessary.
- Build your credibility and onboarding process. If you’re about to invest a serious sum of money into a coach or consultant, would you like them to send you a well-written, clear, put together contract as part of a rehearsed and easy onboarding process? Or would you rather receive a contract 2 weeks into the relationship that you can tell has been copy pasted from several different sources? (Hint: this is ALWAYS detectable, and you are fooling no one. I’ve seen agreements sent to clients with different fonts, different defined terms, different size text, and other similar issues that clearly give away that it was patched together). Obviously, you’d pick the first, right? Setting the tone this way, and showing your new client you are put together, credible, professional, and have invested in your own business by way of legal contracts is the impression you want to make 100%.
A small note to those who try to draft things yourself, or copy/paste from a bunch of different random templates online: remember that attorneys, like doctors, have gone to a significantly long amount of additional schooling, taken multiple-day examinations, and spent literally YEARS studying to be able to competently draft contracts, interpret laws, and understand how to counsel and advise others on all things related to the law. If you wouldn’t consider performing surgery on yourself, filling a cavity yourself, or treating a medical condition without consulting a doctor, I would encourage you to think twice before trying to play lawyer in your business. There are so many nuances in contracts, and it breaks my heart every time I encounter a desperate entrepreneur in a legal battle who realizes after the fact that her contract she wrote herself doesn’t actually say anything she needed it to say, and isn’t relevant to her business.
That being said, Here are my 5 MUST HAVE CONTRACTS FOR ONLINE BUSINESS OWNERS: (Spoiler Alert – check out my Legal Templates for ALL of the below and more!)
This is the agreement between you and your 1:1 client, or anyone you’re serving in a similar, private capacity (e.g. not an online course or digital products sale) and is the contract most people know they need. This is where you’ll outline the full program you are offering to them, including all deliverables, price point, ALL details of any payment plan (including amounts and specific due dates) relevant disclaimers, IP ownership, and the rest of the necessary legal liability provisions. Depending on the type of services you’re offering, this contract will vary slightly in terms of the legal language, and greatly in terms of the program and pricing details.
A couple FAQ’s about client agreements:
(a) No, I don’t recommend having just 1 generic contract that all clients can sign. The point of this document is to outline the particulars of each relationship – if your agreement doesn’t do that, you are leaving a lot of potential issues exposed, and a lot of room for your client to misunderstand the relationship. You need everything clearly laid out in this one document, so if something goes wrong, you’ll have it all here, and can easily refer to it and prove your points.
(b) No, I do not recommend taking payment from a new client over the phone and sending them the contract after the fact. HERE’S WHY: In as few words as possible – a contract requires an offer, acceptance, and consideration (money), in that order, to be valid. In an ideal scenario, the written contract is the offer, the signature is the acceptance, and the payment is the consideration. BUT – when you do this backwards and pay first, it all goes out the window. Technically then, your discussion of the program on the call was the verbal offer, they verbally accepted, and you sealed the deal with their payment over the phone. Sending them a written contract after the fact would likely be a completely new offer. So unless you’re planning to read your whole agreement over the phone prior to taking payment, skip the credit card over the phone and send them the written contract as the offer.
This document is for online courses, membership sites, and any other digital products sold directly through your website or sales pages. They don’t need your involvement in order to create a sale (YAY!) You need a different contract here for a few reasons. First, when you sell digital products passively online, it is not feasible to try to send everyone a contract after they purchase (plus, you now know sending them a contract after the fact doesn’t help anyway). So, the best way to fix this is to remove the signature requirement, and have your customers review and agree to this document prior to completing their purchase by checking a box confirming they have done so before they can purchase. If you’ve bought anything online, you have likely done something similar, and checked one or more boxes confirming you have read and agree to their terms associated with what you’re buying.
DO NOT SKIP THIS STEP. [See my post HERE for why not!]
At some point in your business, you will hire someone to perform a service for you: your website, logo, branding, provide virtual assistance, social media management, etc. When you do, it is VITAL that you have the right contractor agreement in place. Why? (1) Their categorization as a contractor (and not an employee) is SUPER important for you as the hiring person. Everyone needs to be on the same page about this, including the fact that they won’t be eligible for benefits, sick or vacation time, or have access to any other employee benefits. And (2) Since they aren’t an employee, you are NOT automatically the owner of the work they complete for you. In fact, it’s the opposite: without the right language in your contract, THEY are the author of the work they create for you. This means they own your logo, your website, the content they draft for you, and any other original work they create, UNLESS, you have what’s called a “work for hire” provision in your agreement, clarifying this and confirming they are assigning all rights to you.
As SOON as your website is live, you’ll want to have this document in the footer of your website, AND on any other landing or sales page you create, where customers can enter any sort of personal information. This document is especially important to you as a virtual business, as you must be compliant with international data privacy laws (GDPR anyone??)
The fine for NOT having this in place? Can be ASTRONOMICAL. Plus, you don’t want to be on the FTC’s bad list.
Lastly, if you sell any kind of product or service, you will need to have a disclaimer in place that discloses typical results, and helps eliminate any liability on your part if someone does not obtain the results desired, or the results posted by others in the form of testimonials.
For those who sell services or programs designed to help others make money, you will need to have an earnings disclaimer in the footer of your website, as well as on the sales/purchase page for the program. The FTC requires that all such offers include clear disclaimer language to outline to potential customers what average results are, that income is not guaranteed, and other transparency guidelines.
For those who sell services or programs in the health and wellness space, you will need to have a medical disclaimer in the footer of your website, on all purchase pages, AND ideally on all written and pre-recorded content within the program, reminding customers and clients to consult a physician before beginning any new diet or exercise program.
While this isn’t ALL you will need, this is a GREAT start to your online coaching or consulting business, and contracts you should NOT avoid getting!!
What are your must haves in your business? Did any of the above surprise you??
*Disclaimer: While I am a licensed attorney, I am not your attorney, and this does not constitute legal advice. This blog post is intended as legal information only, which may or may not be applicable to your personal situation. Please consult an attorney if you need legal advice on any of the above, or have any specific questions regarding your business