#224 - Why Small Businesses can't afford generic legal documents
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I want to bust one of the biggest myths I hear on repeat: “I’m just a small business, so I don’t need properly tailored legal documents.” That sentence makes my heart skip a beat, and not in a good way. There is nothing “just” about running a small business.
In my early years working in litigation and dispute resolution, I spent a lot of time in court watching businesses fall into conflict over contracts, or the lack of them. It was truly eye-opening. Big companies can absorb mistakes. They have in-house legal teams and financial buffers. Small business? They do not. For you, your legal documents are the bedrock. They hold up your client relationships, your cash flow, your boundaries and your ability to grow without constant stress.
Tailored Documents Do More Than Protect You
Here’s the part most people miss. Tailored legal documents are not only about protection. They are also about positioning. When you send a proposal with crisp, professional, on-brand documents, it signals reliability. It makes it easier for the right client to say yes.
Proper documents also set expectations clearly, so scope and pricing are handled upfront and invoices do not become awkward surprises. That clarity protects your profit margins and stops scope creep before it starts. You are not “being difficult.” You are running a business.
Why Templates Can Cost You More Than You Think
It might seem like generic templates or DIY documents will save you a little bit of money, yet they often do the opposite. They can look unprofessional, miss critical clauses and leave gaps that create misunderstandings. Payment terms can be weak. The law changes. Templates go out of date. Then you are left cleaning up messes that cost far more than doing it properly in the first place, and the time you spend sorting it out is time you are not spending on revenue and growth.
The Mindset Shift
So if you’ve been telling yourself, “I’m just a small business,” flip that thinking. Properly tailored legal documents help you convert prospects, protect your margins and show up as the premium choice in your field. They are not an optional extra. They are part of running a professional business.
If this hit a nerve, share it with a business friend who still thinks legal documents are something you worry about later. Later has a habit of turning into expensive.
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[00:00:47] Tracey: Hello everyone. Welcome back to another episode of the Rise Up in Business Podcast. Today I'm going to unpack one of the biggest myths that I hear when I'm talking to small business owners. I'm a small business lawyer. You know this. You are listening to the podcast so you know that I support small businesses all across the country.
[00:01:08] If you're a longtime listener, you'll know my background is in litigation and dispute resolution, and I've spoken about this earlier on the podcast. In the first 12 years of my career, I spent working as a litigation lawyer, so that meant for all those years I was acting for businesses.
[00:01:25] In court usually. Or mediation. Or arbitration, but usually court suing or being sued most of the time over money. So it's against that background that I say to you today when I hear businesses say, "I'm just a small business, I don't need proper legal documents", It makes my heart skip a beat. And the reason it makes my heart skip a beat is because I know from my experience as a litigator all those years in court, and I know now from being a contracts lawyer who supports small businesses, I know the [00:02:00] value of the contracts and I know that properly tailored legal documents are more important for a small business than they are for a larger organisation. So I'm gonna say that again, and this is what I wanna unpack. One of the biggest myths I hear when I speak to small business owners is when they think that because they're a small business, they don't need proper legal documents. The reality is different. The reality is small businesses need properly tailored legal documents even more than larger companies, larger organisations.
[00:02:35] If I had a magic wand and I could change just one thing, it would be that small businesses stop using the word "just" when they're talking about their business. I'm just a small business. We've just got three people. It's just me and someone else. I would love to never hear that again because it's so disrespectful to the business and the business owner.
[00:02:57] There is nothing just about it. Running a small business is not for the faint of heart. Let's just tell it how it is. You are wearing all the hats, doing all the things, often straddling work, family, home, building a business, wearing hats in the business in relation to the marketing, the content, the delivery, the systems.
[00:03:20] There's nothing just about that. Not at all. So if I could wave that magic wand, it would be small business owners, stop using the word just when they are describing their business. They're doing themselves a disservice. The flow on effect to that is where this episode comes in, because when small businesses are referring to their business as just a small business, I don't need this and I don't need that. We are just a small business, the flow on is I don't need proper legal documents. I'm just a small business. The opposite is true. A small business needs proper legal documents more so than any other, and I'm going to explain why in this episode. The first thing I [00:04:00] want to say though, is I appreciate the well intended reference to, I don't need proper legal documents. Because if that's translated, the business owner's saying, I wanna be careful with my money and I don't wanna invest in it. And I understand being careful with money in small business.
[00:04:18] So I appreciate the sentiment of where that's coming from. It's well intended most of the time, but the problem lies with the way the costs are being framed for those legal documents, and I'm gonna talk about that a little bit later in this episode. It's really not a cost, it's an investment.
[00:04:33] I'm gonna explain why, but first and foremost, I want to explain Why properly tailored documents are more important for a small business than any other? Let's think about a large organisation, large business. Big business. They have an in-house legal team. So they have a team who are dedicated to fixing problems when they come up, they've got a team dedicated to ironing out glitches with clients, to chasing late payments.
[00:04:59] They've got a team dedicated to do that, in-house legal right there. They've got a team. You've got an issue. You're taking issue with this. You're not paying that. We've got a scope creep issue. They're all over it. Small business doesn't have an in-house legal team. Larger business also has financial buffering and cushioning, so they can take a hit, they can write off debts, they can take a hit when it comes to refunds, they can cash flow projects being drawn out for however long. They've got that financial buffer.
[00:05:29] They've got well established systems and processes, and they've got individuals often at each point in the process. They've got multiple people checking each touch point. They've got multiple sets of eyes over each of the steps that need to be taken when a client's onboarded, services are delivered and offboarding happens, they've got the team behind them. And often larger businesses have multiple revenue streams, so their risk is fully diversified. [00:06:00] They don't just have one or two offerings and all their eggs in those baskets. They've got a lot, which means if one bad client relationship comes up, they can cut ties and move on and focus on another revenue stream. It's not going to sink the business. Now let's look at this in the context of the small business. The small business doesn't have an in-house legal team. The small business doesn't have somebody dedicated to ironing out these glitches and problems and negotiating terms each and every single time a project is taken on. The small business often doesn't have the financial cushioning, so refund requests or writing off debt matters. That will often be an annual profit for some small businesses, they can't absorb it.
[00:06:45] They can't absorb late payments or non-payments. Cash flowing a project for months and months and months that wasn't expected. Small businesses don't have that luxury. Small businesses also don't have multiple people all over the processes and systems to double check every step.
[00:07:01] It's usually one person, sometimes two. Very rarely is it more than that in my experience, which means the processes and systems need to be streamlined, seamless, rinse and repeat for a small business, and those legal documents are crucial in that process. Risk sits with the business owner, the individual business owner or the directors of the small business, the risk sits there.
[00:07:27] So if there's a bad client relationship or something soured, it matters. Brand and reputation risk really matters to a small business because they don't have the revenue streams like the bigger organisations. They can't just cut a client loose and expect that to be the end of it.
[00:07:42] The ripple effect for dissatisfied clients in a small business can be really significant 'cause we all know that unhappy clients tell more people than happy clients, and then negative reviews can have a significant ripple effect to small business, and that's something that small business can't carry [00:08:00] without suffering a negative impact.
[00:08:04] So there's a vast difference here between large organisations and big business and small business. And what's at the heart of setting a business up for success is the legal documents and the frameworks and the processes and the systems.
[00:08:18] So when we come back to a small business, and I'm saying to you properly tailored legal documents are more important for a small business than any other, the reason I'm saying that is because small businesses benefit so significantly from having properly tailored legals to help convert prospects to paying clients.
[00:08:35] That's the first thing. So when clients have touchpoints with you, they've been referred to you, they go to the website, they have a call, you're gonna send them out your quote or your proposal, and you've got your properly tailored legals that go with that. Or you're sending out your agreement that's been edited and reflects the scope of the work that you've talked about, and all you're doing is asking them to read and sign it, when you're having those touchpoints, having professional legals to send out, which is on brand, it sounds like you, it looks like you, it's an extension of the touch points that the prospect has already had with you, it makes it so much easier for them to say, hell yes, I wanna work with this business owner. They're confident, they're professional. The documents I'm getting are completely consistent. Yes, you are making it so easy for them to say yes. So that's the first thing. The second thing is you're managing expectations.
[00:09:24] So you're setting boundaries, which are so important for a small business. You're setting boundaries because you're outlining in your properly tailored legals what you'll be doing, what you won't be doing, how you're gonna deal with variations, what the processes are for your services, what they're expected to pay, and when.
[00:09:41] So then when you are delivering the services, invoices aren't coming as a surprise. If someone wants to extend the scope of the services, rather than dealing with scope creep where you're potentially working for free, the client's expecting the variation email confirming this additional work is gonna cost [00:10:00] this much, and they say yes.
[00:10:01] So when you invoice it, it's not a surprise and they're happy to pay. So your boundaries of managing expectations are setting both parties up for success. That has a flow onto protecting your profit margin every single time because invoices are being paid, variation invoices are being paid on time every time because the client knows what to expect.
[00:10:23] So you're protecting your profit margins with your properly tailored legals. It doesn't matter for the larger businesses when the invoices are paid necessarily because the bottom line at the end of the year, it all washes out the same.
[00:10:36] And if they have to write off some debts, so be it. It matters for the small business, the small business who's cash flowing on a month to month basis. These things really matter when you're delivering your services the way you say you will in your legal documents, in your terms of service, your client service agreement, the client's expectations are managed. Invoices are not coming as a surprise. They're being paid. It all has a flow on effect. Then what you're getting at the end of the day as a small business owner with these properly tailored legals is real peace of mind.
[00:11:11] You are not lying in bed worrying about whether you can pay your BAS or your IAS because the cash flow's poor, because the cash flow is consistent. You can rely on it. You don't have unexpected issues coming up with clients because you've delayed or because they thought stage one meant this, but really it meant that there's just so much room for error and there's so much scope for clients becoming disgruntled when you don't have frameworks in place and those boundaries in place to manage the expectations and manage the experience, and that's what the documents give you.
[00:11:46] So when business owners say to me, oh, I'm just a small business. I don't need properly tailored legal documents, i'm going to use a template, or I'm going to use something that I've put together myself, my heart does skip a beat because it's like [00:12:00] you can see a train wreck coming, you know, you, you hear the saying, often, I can see the train wreck and there's nothing I can do about it.
[00:12:06] Or I don't wanna be the person that feels like there's nothing they can do about it. Hence this podcast episode and, and hence lots of discussions I have with people. But if you are a small business owner and you're not prioritizing the legal documents, which are the foundational documents for your business, you are leaving yourself exposed to loss conversions.
[00:12:26] Because templates and DIY documents ooze a lack of professionalism, they really do. They often miss provisions. They miss really important clauses. They're often not current. The law changes often and and templates and putting documents together in a DIY fashion are very rarely current and very rarely comprehensive.
[00:12:47] They just don't do what they're supposed to do. You lose clients before you even had them. Because it oozes a lack of professionalism, and it's not consistent with the touch points that the client's had so far with you and your brand. That's the first thing. The second thing is that it leaks revenue because if you've got unclear payment terms or you've got terms that are not enforceable, you then find yourself chasing invoices to be paid.
[00:13:11] The next point is your profit margins. It really eats into the profit margins because with the scope creep issue, you're essentially working for free. There's no clear process for dealing with variations. There's no clear process for dealing with add-ons, which means when the client ultimately receives an invoice that they weren't expecting, they're unlikely to pay, and then they start taking issue with other aspects of the work.
[00:13:32] I'm sure you're nodding along, drawing on an experience you may have had or an experience that somebody you know may have had in relation to that. But the revenue and the profit are really important considerations when we're running a small business. So managing that is crucial and managing that well is done through your legals.
[00:13:51] The last point I wanna talk about, which is the cost to small business when using DIY documents or templates is the time [00:14:00] sap, which is the time it takes you to deal with these issues. The time it takes dealing with disgruntled clients, the time it takes chasing invoices, the time it takes worrying about how you're gonna navigate this.
[00:14:10] And when you're dealing with that and spending your time that way, you are not spending your time on revenue generating activities in your business, and you're certainly not spending your time on growth activities for your business. So there's real cost. So when a small business says, I'm just a small business, I don't need properly tailored legals, yes you do more so than any other, but the point is you can't afford not to have properly tailored legals for the reasons that I've discussed.
[00:14:36] When I said at the beginning of the episode that I appreciate that it's coming from a good place often, when small business owners wanna be careful with their money and they wanna be really intentional with their spend, so they don't prioritise the legal documents, they prioritise the website, the logo, the coach, the VA, but not the legals.
[00:14:55] To that I say, flip it because that's backwards. If you are working with a builder to build your dream home and you say to your builder, just go easy on the foundations there, just cut a few corners. I don't wanna spend that much. I'm, I'm good with this, if your builder's any good, he'll sack you.
[00:15:11] He won't wanna build that way because he's gonna know that this house is gonna have nothing but problems in the future. Nothing but problems. And that is not a dream house. So you don't take shortcuts on your foundation, building your dream house. Equally, we don't take shortcuts on the foundations when we're building our business.
[00:15:29] What I say when clients talk to me about this is the investment attached to your properly tailored legals is that. It's an investment in your business infrastructure. It's an investment into developing the most powerful tool your business has, which is your legal documents. And I've explained why. It's a revenue enabler. It really is. The frameworks that are outlined in your properly Tailored Legals is a revenue enabler. It enables your business to receive smooth, reliable cash [00:16:00] flow.
[00:16:00] So that's an investment. That's not a cost. And the third point that I like to make and I wanna share with you here, is that your properly tailored legals can be your competitive advantage. If you've ever thought to yourself, I'm just a small business, so I don't need properly tailored legals, imagine how many other business owners have thought that.
[00:16:19] So imagine the competitive advantage you get when you reframe it and you treat the legals, the properly tailored legals as a priority, as the core foundational documents for your business that they are, and you treat them such that they become the most powerful tool your business has, that my friends, is a competitive advantage right there because you are helping increase your conversions from prospects to paying clients right there. You're setting yourself apart because you are using the documents to build trust and credibility with your prospects, with your clients. You're managing the expectation of clients and delivering stellar services such that you offboarding process is so good that you have just guaranteed yourself repeat clients, word of mouth referrals and positive reviews, and the ripple effect that that has for small business is so important because as a small business, the reputation and the brand is all centered around the trust and credibility piece. And what I'm saying is these documents go to the heart, the trust and credibility piece.
[00:17:25] So that is what I wanted to share with you in this episode, that as a small business owner, properly tailored legal documents for you, for your small business are more important than for any other business because you don't have an in-house legal team. You don't have the financial buffers or cushioning that larger businesses do.
[00:17:46] You don't have multiple people at every touch point for your internal processes and systems, and you don't have multiple, multiple revenue streams like the larger businesses do. You wanna build trust and [00:18:00] credibility in your business. Your brand and your reputation matter. You want to position yourself as the premium choice.
[00:18:06] You want to make sure that you are consistently converting prospects to paying clients. You want to get paid every time on time, so you've got that smooth, reliable cash flow. And this all comes from the foundational documents, the foundational, properly tailored legals that will build trust and credibility with your clients and your audience, and that will give you the real peace of mind that small business owners constantly tell me that they're after. I hope you have found that helpful. You can see now why, with my background, why I would use my magic wand to stop business owners referring to themselves as just a small business, because you can see how that flow on effect is so easily extended to, because I'm just a small business, I don't need properly tailored legals. You do. It's the opposite. The opposite is true. I hope you've loved this episode. I hope it's been helpful. If you're thinking of other business owners that you know that use the phrase, I'm just a small business or have shared with you their views around, I don't need properly tailored legals, please feel free to share this episode with them.
[00:19:16] Together, that's how we'll reach even more business owners and try to enrich the business journey as much as we possibly can. As always, thank you for listening. I'll catch you next time.
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