Here’s a New Year’s resolution for your business: Get everything in writing. While it’s true that many farmers still make deals on a handshake, Ferrell says getting the deal in writing is important, especially in tough economic times.
“It’s kind of like that old Ronald Reagan saying, ‘Trust but verify’,” he says. “A handshake is a good idea but so is having a written agreement.”
Here are three reasons Ferrell thinks having a written agreement is a must.
- Thinking through the transaction. When you write a contract for a business agreement you and your counterparty are required to think through every facet of the deal. “You think about what can potentially go wrong,” Ferrell says. “That will help you avoid a lot of problems before they come up.”
- There’s a written record of negotiations. During a business transaction there is usually quite a bit of back-and-forth negotiation. When you have a written contract, all of those details are spelled out so there’s no ‘he said, she said’. “You’ve written down things you agreed to, so you’re not susceptible to forgetting what was said,” Ferrell explains.
- It’s an easy way to resolve conflict. A contract resolves conflicts immediately because you have a written agreement to fall back on. “You have an automatic resolution to whatever problem there might be,” he says.