As a service provider, the most important type of boundary you can set as a business owner involves those policies and procedures that govern how you interact with your clients. The more precise you can be about the services you provide, your fee structure, and what you expect from your clients, the smoother your work relationships will be. And the most effective way to make sure that each party involved understands these policies -- and that there is no confusion -- is to have each client read and sign a written contract.

WHY HAVE A CONTRACT

Some entrepreneurs will enter into working relationships without the benefit of a contract. Certainly, as an business owner, you are welcome to do whatever you wish. However, I would caution you against this practice for a couple of reasons. First, you are setting your customers up for confusion about your business policies down the road. Having each client sign a contract before beginning work allows you to make sure they understand how you work, your pricing structure, and any other pertinent information up front. A contract also gives you a measure of protection if a client fails to uphold his or her end of the bargain -- sometimes the mere mention of a contract is enough to keep your clients in line. Finally, a contract adds a measure of professionalism to your business. People tend to take a businessperson more seriously when he or she pulls out a well-written contract. And anything that increases your credibility can only be a bonus!

A written agreement does several things for you:

- clarifies your pricing and policies

- insures that your client understands your requirements

- outlines the services you provide

- protects you against loss of income from clients who cancel or no-show

- gives you leverage in an legal dispute with a client

So what do you need to include in your contract? Here are a list of issues to consider:

SERVICES

Exactly what services will you provide? Exactly what do you require of the client for a successful relationship? What are the anticipated results of the services you will provide the client? How will you measure those results? What kind of guarantee do you provide? How do you determine when the terms of the contract have been met and when services have successfully been rendered?

SCHEDULED APPOINTMENT TIMES

How will you schedule appointments with a client -- in writing or with a verbal agreement? How will you handle a situation when your client is running late -- and how long will you wait for a client after the scheduled appointment time before assuming canceling the appointment? How will you compensate the client if you are running late?

PRICING

How will you charge for your services -- by the hour? By the day? By the project? Will you present a formal proposal, a binding bid, or a flexible estimate prior to beginning work? Will you charge separately for other services -- shopping for supplies, researching other solutions, consulting with other professionals? Will you charge for travel -- and how far are you willing to travel to work with a client? Will you work with clients who live outside of your city or state? What is your minimum charge for an out-of-town client? Will you charge extra for working on weekends? Evenings? Holidays? For rush jobs?

PAYMENT TERMS

When do you expect to be paid by your client? At the time that services are rendered? Within 30 days? 60 days? 90 days? Will you collect a retainer and subtract worked hours from that balance as you go? Will you present your client with a bill when you meet with your customer -- or mail an invoice later?

CANCELLATION FEE

How much notice will you require when a client cancels an appointment? 24 hours? 48 hours? What are the consequences of canceling without adequate notice? How will you handle a no-show? Will you charge for the entire scheduled session? A flat fee? Is it due even if your client chooses not to reschedule the appointment? How will you collect? And how will you compensate the client if you have to cancel or no-show?

LATE PAYMENT AND NON-PAYMENT

What will your fee be for paying late -- a percentage? A flat fee? When does the clock start ticking? How long will you allow a late fee to remain due until you escalate your efforts? Will you use a collections agency to recoup money owed? Will you take a client to small claims court?

CONFIDENTIALITY

How will you protect any sensitive business, personal, financial, or legal information you learn about a client? Under what circumstances may you share this information with another person or organization? What documentation of permission do you require from the client before discussing his or her issues with another person?

MAKING IT LEGAL

A solid contract is one of the easiest and most proactive ways to prevent client misunderstandings and potential legal entanglements. You may use these guidelines to develop the basic structure of your contract, but please be sure to have an attorney review it to make sure that the language is appropriate and the document will stand up in court. Good luck!