#233 - When your contracts haven't kept up with your business
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Running a business makes it very easy to ignore the paperwork in favour of the work that actually brings in money. I get it. But one of the biggest costs I see from not having the right contracts in place is not just unpaid invoices. It is the energy you lose when things go sideways. The time, the back and forth, the emotional load, the distraction. All of that momentum that should be going into growth gets swallowed up by a problem that often could have been avoided with clearer, current documentation.
Outdated contracts create gaps, and gaps create friction
Outdated contracts are sneaky like that. They might look fine on the surface, but if they no longer match how you deliver your services, what you actually include, how you communicate, or what your boundaries are, they create gaps. Those gaps turn into confusion, and confusion turns into friction. Suddenly you are dealing with scope creep, payment pushback, mismatched expectations, or awkward conversations that drain your focus. It is not just a legal issue, but an operations issue, a client experience issue, a capacity issue.
Start with a simple contract audit
The simplest starting point is a contract audit. Not a dramatic overhaul, just a proper review. Do your contracts reflect the business you are running today, not the one you were running two years ago? Do they match your current offers, timelines, pricing, and process? Do they still feel clear when you read them, or do you find yourself thinking, “I hope they do not ask about that part”? That reaction is usually a clue.
Get proper advice when you spot misalignment
And if you spot misalignment, that is your cue to get proper advice and update them. This is not the place for patch jobs or borrowed templates. A lawyer can help you tighten the areas that matter, make sure the agreement is compliant, and make it fit the way your business actually works now. Because the goal is not to create a scary document. The goal is to create clarity, protection, and a smoother client experience.
The payoff is confidence and momentum
When your contracts are current and aligned, you feel it. You send them with confidence. Clients understand what they are agreeing to. Expectations are managed early. And you get to keep your energy where it belongs, on delivery, innovation and growth. Keeping your contracts up to date is not admin for the sake of admin. It is a strategic advantage, and it is one of the simplest ways to protect your next chapter before you are forced into a clean up.
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[00:00:48] Tracey: You started your business with a contract that you downloaded online, or you bought a template or someone gave you a copy of theirs and it did the job. It got you through the early days in business because you were juggling so many things and wearing all the hats, which is every business owner when they're starting out.
[00:01:05] But somewhere between then and where you are now, things have changed. Your business has grown, you've upleveled, but your contracts haven't kept up with you.
[00:01:17] This is a conversation I have with business owners time and time again. So I'm going to dive into the episode today and talk to you about how to spot contracts that are a mismatch with how you're operating your business, how to spot it, what to do about it before things become a real mess.
[00:01:33] Welcome back to the podcast everyone. Thanks for joining me for another episode.
[00:01:37] I talk about prevention being better than cure in business a lot. I'm very active about that on social media. It's a common theme through this podcast. One of the topics that comes up a lot in conversations I'm having with growing businesses is I don't know if my contracts are serving me anymore. I'm not sure if they're doing all the things they're supposed to do.
[00:01:58] So much has changed in my [00:02:00] business. I dunno how to identify the gaps. I dunno what to do about my contracts if they're outdated. Let's dive in today. I'm gonna step you through the key areas that you can take a look at right now to identify whether the contracts that you used at the beginning are still serving you, whether there's a mismatch or whether there's gaps that could leave you exposed. So let's dive in.
[00:02:24] First of all, what do your contracts say about your scope of services? So whether you're a creative, whether you're a coach or a consultant, what do your contracts say about your scope of services and what are your scope of services? This is often the first pain point that I can identify easily with business owners when we look at the contract and then we look at how the services are provided or what services are provided and they don't match.
[00:02:53] Often what happens over the years with growing businesses is service offerings evolve. The way services are provided change and adapt over the years to client needs. And business owners often say to me, I found a better way. I found a better way to provide my services, and clients love it, great, but the documentation hasn't been kept up to date.
[00:03:17] So it's not reflective of the way services are being delivered or what's included in the scope. As you can imagine, this is where the majority of disputes are born right here, because the client is expecting one thing, you are delivering another. You think you're delivering more and better and going above and beyond, but the client has read the agreement, the client's read your terms. So there is a mismatch here, misaligned expectations here, and that often fuels really awkward and uncomfortable conversations with clients at some point.
[00:03:54] And those awkward and uncomfortable conversations can be avoided because sometimes there's no way back from that. Sometimes there [00:04:00] is, often there's not. So the first point is your scope. In your contracts, what does it say and does it align with what and how you deliver?
[00:04:07] Now the second point is your payment terms. In the early stages of business, business owners often accept payment like it's a gift. So they don't mind how they get it, when they get it, in what form they get it. So long as they get it. But things change over time. As your business grows, you often have larger liabilities.
[00:04:30] And because your services and your offerings have grown, often your invoices are larger. Timing matters. Cash flows the cornerstone of every business and timing matters. So if we don't have payment terms in our agreements that reflect what we actually need now, business owners can find themselves in a pickle or a cashflow crunch or dealing with bigger issues when clients challenge payment, because guess what, back to point 1, there's some misaligned expectations around scope.
[00:04:59] Often as businesses grow, payment terms around paying in advance, deposits, staging or phasing payments, all start being things that business owners entertain and consider and introduce in a way that serves the business and serves the clients. But often, again, those types of things aren't reflected in the contracts, which mean there is that misalignment.
[00:05:21] It is a mismatch and worse and inconsistency. So a real inconsistency from the quote or the proposal to the documentation to how the business owner actually invoices. So all of that is a recipe for disaster when we're talking about receiving payment. And let's be honest, everyone wants to get paid.
[00:05:39] Everyone deserves to get paid. Everyone should get paid. It should be easy though. It should be seamless and streamlined. It shouldn't be a pain point and it shouldn't be an obstacle. The only way we can achieve that is by having crystal clear clarity with our clients on what our payment terms are, making sure that's consistent with how we operate, and then relying on that [00:06:00] smooth cash flow going forward.
[00:06:01] So payment terms is the second point. The third point is contractors. Often with a growing business, they need support. At some point the business owner will say, right, I need support here. Whether we're talking VAs, whether we are talking specialist contractors that can come in and help provide some of the services.
[00:06:23] It's a discussion that I have regularly with business owners as they grow, because there is a consideration around do I hire employees or do I engage contractors? And often there is a desire to engage contractors first to see how that goes in terms of managing a growing team.
[00:06:41] And then later on, the conversation naturally pivots into a conversation around employees. But if a business has decided to engage specialist contractors or any type of support, if that contractor or that support has anything to do with the client or the delivery of the services, the agreements need to give the right to the business owner to do that.
[00:07:05] That's really important so that client's expectations, again, are managed such that the business owner has made it really clear in the documentation. I may engage contractors from time to time to deliver part of these services, but I will be the point of contact. I will still be the main person and I will still be wholly responsible for the delivery of your services under this agreement. It puts the client's minds at ease so that they know the business owner is not palming off responsibility or liability or quality control. I can still have absolute confidence in this business that I'm engaging, that they're going to oversee and ensure quality service delivery for what it is that I'm engaging them.
[00:07:46] So that clause is very important for growing businesses who do start to engage contractors when those contractors are involved in any way, shape, or form in part of the delivery of those services.
[00:07:59] The next [00:08:00] point I want to talk about is your intellectual property. What do your contracts say about your IP ownership? What I tend to find is earlier on, business owners don't really mind what happens with the IP. It's not a big deal because they're more focused on getting clients, impressing clients and getting paid.
[00:08:19] So the IP ownership really is an afterthought, and frankly, often newer business owners will say to me, I don't care about the IP. Whatever the client wants, I wanna keep them happy. I need the client. But as the business grows, IP ownership becomes really important because there's more clients, more delivery, and more development of value in IP.
[00:08:40] So the business is now developing frameworks, concepts. The businesses are now developing content, courses, and they might want to repurpose that for the next client because it was their unique framework, for example. It's really important to deal with IP ownership in the agreement so that the expectations are managed really clearly right from the very beginning.
[00:09:04] So the client knows in the provision of these services, when I pay, do I have ownership then of the IP? Or does the business owner retain ownership, in which case, do I have a licence to use it and how can I use it? Think about a consultant who's delivering training. So they go into a workplace, they collaborate with the business, they develop a bespoke training, and they roll it out.
[00:09:29] That bespoke training may have some unique frameworks or concepts that that business owner has developed, and it's their point of difference in the market. That means they want to use that framework because it's theirs for their next client and the one after and the one after. So it's really important that the business makes it clear that they retain ownership of their preexisting IP around their frameworks and methodologies and things like that.
[00:09:55] It then needs to be really clear to the client what they can and can't [00:10:00] use the IP for. So there'll be a licence clause in the IP clause here, and it'll say something like, we're granting you a licence to use it for this purpose. Often that business owner wants to make sure that that client doesn't take their material, bring someone in house, or use someone that's already there and start rinsing and repeating that training.
[00:10:20] That's a common pain point or a common concern that I talk to growing businesses about. They're concerned to make sure that the business can't then go and roll out that training on their own without at least talking to or obtaining consent from the consultant because it was their IP. Really important.
[00:10:39] If you're a creative, and you are doing a creative project for a client, who owns the IP when you are finished? If you're an interior designer, do you maintain IP ownership of your drawings, your concepts, or upon full payment? Are you assigning that IP to the client, in which case they can do whatever they want with it.
[00:10:58] They can take it to another designer, they can take it to an architect, they can build another property or whatever it might be, the decision is unique to you. And I have interior designers who do it both ways. Some say it's fine once I've created the IP, it's yours when you've paid no problem. Others say, no, I own the IP.
[00:11:17] You can't do anything with it other than this, this, and this. Which means they're preserving the integrity of their designs because the client can't take it to someone else later for another project. So there's lots of nuances to think about when it comes to IP, so you can understand then why it's something that's generally overlooked in the earlier days, it's not really important because there are so many other competing priorities. But as the business grows, it's very quickly a clause that becomes outdated because it's not keeping up with the way the business is operating and it's not keeping up with what the business owner wants to do around IP ownership.
[00:11:53] So having a look at the IP ownership clause is a really important step to take when we're considering whether you've outgrown your [00:12:00] agreements. And the final point that I want to talk about in this episode is the clause to deal with disputes.
[00:12:07] Early in business, business owners will often say to me, I don't care. It's not going to happen to me. Well, they say that to me initially, and then we have a conversation such that they accept that it may well happen, but even if it does happen, I'm not fussed, I don't like conflict, I will just give them back their money.
[00:12:25] I will just do what they want so I can move on. So I don't wanna focus on dispute resolution, and I don't want a framework to deal with what happens when things go wrong. That changes, hand on heart. That attitude and that position changes over time because as the business grows, as the business owners running the business year on year on year, the business owner is subject to things happening that are outside their control.
[00:12:51] The unexpected, my goodness, a client said this, this happened with one of my contractors. They just didn't expect it, but then they experienced it. And so once they've experienced some of these things going sideways and the unexpected thing happening, they will reach out to me and say, Tracey, I think we need to have a conversation now about what our framework is around dispute resolution.
[00:13:12] What does that look like? And I genuinely think this is one of the most important clauses in any business contract, hand on heart. And I say that based on my 12 years as a litigation lawyer earlier in my career, because back then, honestly, when it comes to what can go wrong in business, there's nothing I didn't see.
[00:13:36] I saw it all. And having a framework in place where we bring people to the table, we open communication, we have a dialogue, we're in a much stronger position to diffuse the issue or the grievance or whatever the complaint is by engaging in a structured process such that we are then positioning ourselves to [00:14:00] avoid somebody running off and lawyering up as it's called, or going and commencing an action with Fair Work or the tribunal or the court or whatever it might be, because we've had the opportunity through our framework in our document to say, right, there's a grievance, there's an issue, there's a concern. Let's talk about it. What is it? Outline it. Talk about it, engage. There's a whole host of different ways you can approach it. But without having that, we don't have any leverage to say to the client who has the issue, let's sit down and do this.
[00:14:30] Let's go through this process. Because they've reached a point where they don't want to do that and they don't have to. But if we have the framework in our documentation, then they do have to, and we are setting ourselves up for success here to diffuse the issue, to resolve the issue, and hopefully to preserve the relationship before it's fractured, such that we can continue on.
[00:14:53] And as business owners, I don't need to tell you how important it is to have that ability because unhappy clients will always tell more people than happy clients. We all know this. We've all read the stories, we've all read the articles, we all know the data. And business owners don't want to have to deal with the ripple effect of that negativity, that negative feedback, that negative review, that negative word of mouth.
[00:15:17] It's the reverse. Business owners want to be able to set themselves up for success, to not just meet client expectations, but to exceed them so that we have repeat clients, positive reviews, positive word of mouth referrals. Those things are priceless for a business owner on the growth trajectory.
[00:15:37] Therefore, your clause for dealing with what to do when things go sideways is really important. So those are the five areas that will tell you very quickly whether your contracts are misaligned with your business, whether your business has outgrown your contracts. Those are the areas to look at. The costs of not having proper [00:16:00] contracts are significant.
[00:16:01] It's not just unpaid invoices. It's not just having to write off those invoices and the impact on your profit. It's the energetic cost and the cost to your business when your finger's not on the pulse. And instead of engaging in revenue generating activities, or instead of focusing on growth and the trajectory, you are off dealing with issues with clients that could have been avoided if the contracts had have kept up with you and if the contracts support the business for where it is now and where it's headed. There's a real cost around that. And like I just touched on a moment ago, the flow on effect or the ripple effect to those unhappy clients is considerable. All of that can be avoided. It can all be avoided when the contracts keep up with where the business is at.
[00:16:49] And by taking a moment to pause and have a look at and reflect on the documentation you have in the business and being grateful for how well it served you till now, but identifying that what got you here is not going to get you there, and that there is a whole host of risk now associated with contracts that don't align.
[00:17:09] So now that I've shared that with you, what are we gonna do about it? What do you do from here? I've shared those things with you. What are the next steps, Tracey? What do I do?
[00:17:18] The first step is to audit what you have. Go and have a look at your contracts wherever they are. Bring them out. When was it last reviewed? By the way, I always say to my clients that we should be reviewing these things once a year or when things change, just sitting down to cast your eye over to make sure they're still aligned and they're still reflective of how you do business.
[00:17:37] So the first thing is audit them. Audit the documents and make sure that they still do what they're supposed to do and they align with how you are doing business. Think through when you're doing that, what's changed in your business over the last 12 to 24 months? What's changed? List that out, what's changed?
[00:17:56] So we can make sure then when you're doing that review that [00:18:00] what has changed is reflected in your documents. And chances are if they haven't been updated for a while or if they were a template or a piecemeal, this will do for now at the beginning, chances are they won't meet you where you are at now, and it's important to identify that.
[00:18:16] And once you're clear on what's changed over the last year or two, you can then use that lens when you're looking through the documentation. If you are satisfied that the documents aren't where they need to be and they haven't kept up with your business and they're not meeting your business where it's at now, it's the time to reach out to your lawyer to have them reviewed, to have the conversation about what's changed and how you're operating now, to either have them updated or have new ones developed from the ground up.
[00:18:45] Just depends on how close the existing agreements are to where they need to be as to whether it'll be more cost effective to update those existing documents or whether it'll be more cost effective to start from the ground up to develop new ones. That's a conversation I have a lot of the time with business owners when they do share with me their existing documents and we realise just how many things have changed since they had them done and just how many gaps there are.
[00:19:11] By the time we work that out, the amount of time it would take to work within them and fiddle around and up level them to where they need to be is not going to be efficient. Therefore, it's not cost effective, and often the most cost effective step from here is to develop new agreements to meet the business where it's at now, and to design them so that they can evolve and grow with the business moving forward.
[00:19:33] So there we have it. There is my short and sharp episode on how to identify whether your business has outgrown your documents and what to do to work through that process. So just to recap, first, have a look at your scope. Does the scope of services framework in your documents align with what and how you deliver now?
[00:19:55] Then have a look at your payment terms.
[00:19:58] Do your payment terms align [00:20:00] with how you invoice and require payment to be made? Deposits, staging, phasing, all the things. Is all of that accurately reflected in your agreements? The third thing is your right to use contractors, a really important one in a growth phase. The fourth is your IP ownership.
[00:20:18] Is it clear? Is it right? Does it align with your intentions now? And then the fifth is your dispute resolution clause. The really important clause that's going to lay out the framework for you when things go sideways or when something unexpected happens. That's where I suggest you start when reviewing your agreements to make sure that they're doing all the things that they need to be doing. If those boxes aren't ticked, if you're not completely confident when you're doing this review, reach out. Let's have a conversation. Either reach out to your business lawyer who drafted them for you to ask the question around reviewing and updating or what that might look like. And if you don't have a business lawyer, you are most welcome to reach out to me. We can have a conversation, take a look at the documents, and see what it is that we need to do to set you up for sustainable success moving forward.
[00:21:03] It has been such a pleasure recording this episode for you. I genuinely hope you have found this to be so powerful so that you know where your risk areas are with your contracts, and so that you are really clear on what you need to do to set the business up for success for the next season moving forward.
[00:21:19] As always, if you know of a business owner that you think would benefit from listening to this too, please feel free to share this episode with them in any way, shape, or form. I would be so grateful because together that's how we get the podcast into the ears of even more business owners. Thank you so much for listening.
[00:21:36] I'll catch you next time.
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