As a business owner you of all people know how important having a solid budget for your business is. Without one, you might as well start your exit plan. But with one, you gift your business an advantage that’ll benefit you in the long run (and short run). Proper budgeting is one of the biggest deciding factors in determining whether a company scales well or flounders into bankruptcy. I know what side of the coin I want to be on and I’m sure you do too.

So let’s dive in:

1. Determine your Budget Goals and Objectives

Knowing your company’s specific goals and objectives will provide a solid outline of its vision for the future. How can you achieve a goal when it’s not defined? Don’t shoot for the stars. Ensure them! You achieve this by being clear and concise with what you want in the short term and especially the long term. Sit down and detail exactly what your incoming revenue and outgoing expense are. Analyze the costs and see where your money is going and how you can beneficially adjust.

Bonus points if when you do so, you look for ways you can maximize an asset or minimize a liability! Determine what your absolute necessities are and explore ways to cut down costs. You can do this by re-negotiating contracts for lower prices and finding creative ways to maximize your resources. This is called efficiency for a reason and finding creative ways to use your resources can be hugely beneficial for your company and if marketed well, can sometimes lead to a huge success.

When determining budget goals, it’s important to be realistic and considerate of where you’re at. Every business starts small for a good reason. Identifying your objectives early ensures that you develop a solid plan to stay on track. Consistently is key. Sticking to your well-constructed budget is quite literally the biggest factor when it comes to the financial success of your business.

2. Employment Contract

When it comes to your employee’s contracts, clarity is of the utmost importance. Many of us have signed one but providing a legitimate, legally-binding one as an employer is a whole different ball game. As employment contract is the basis of understanding between you and your employee. Because of this, it’s better to cover all parts in great details to ensure that you’re protected as a business owner from a variety of potential circumstances. When drafting this document you should consider all of the following:

-Job Position + Description: Define exactly what the position title is, its responsibilities and its role inside your company.

–Job Performance Expectation: Be especially clear with this part because it’ll detail exactly how you expect the job to be done. More is more when communicating this part of the agreement.

-Duration of Employment: This part of the contract specifies whether the employment is for a fixed term or indefinite duration.

-Work Hours and Place of Employment: This includes any remote work specifications, or lack thereof. It should also include any overtime expectations and compensation for extra hours worked.

-Salary + Compensation: Clearly state the employee’s compensation package, which includes the base salary, bonuses, commissions, or any other forms of payment. Include how you expect to pay your employee.

-Benefits, Perks + Additional Packages: This part of the contract (if applicable) outlines any benefits such as health insurance, retirement plans, paid time off, and any other perks you intend to provide.

-Dispute Resolution: This part outlines the procedures for resolving disputes between the you and your employee, such as mediation or arbitration.

–Termination Clause: This section explains the circumstances under which either party can terminate the employment relationship. It may specify notice periods required from either party and any severance packages.

-Legal Compliance: This asserts that the employment relationship complies with all applicable local, state, and federal laws and regulations.

-Codes of Conduct and Ethics: Another major headache that you can avoid is when your ethical expectations are clearly outlined in your employment contract. It should go without saying that any employee should behave morally and professionally but let’s face it, that’s not always the case! Covering the bases on your end is the best way to ensure both you and your employee are on the same page about your expectations of their behavior in your workplace.

You can save yourself a huge misunderstanding and potentially a lawsuit when you’re proactive and clear in your employment contract. It’s important to assure both parties are safeguarded from any potentially avoidable circumstances.

3. Lease agreement

Your lease agreement is important to make sure you have buttoned up as well. You know what’s worse and more frustrating than personally moving? Moving an entire office and team. Not only is it physically and mentally exhausting but it ultimately distracts your team from performing well (for you). You can easily avoid this by being pro-active about your working space and staying on top of the lease agreement. Make sure to be clear on 3 things when signing your lease:

• Duration of Lease: Especially when it comes to your company’s project(s) timeline. Be conscious and realistic about how long your company’s projects, contracts and any partnerships agreement durations are. Develop a general-time frame and realistically estimate if there’s a chance that you’ll have to re-locate in the near future.
• Your Company’s Growth: Growing your company inevitably leads to the need for a bigger office and for good reason. Scaling is the ultimate goal for a company. The last thing you want is to need a larger office to satisfy your growing demand while stuck in a lease with an office you’ve outgrown! That’s a situation you can easily avoid by being familiar with your lease.
• Potential rent increases in your area: When signing a lease and beginning of your office rental journey, good communication goes a long way. Talking to your realtor and making sure all these details are buttoned up in regards to rent hikes and increases will minimize the chance of any surprises and help you in the long run.

And in business, it’s all about the long game.

4. Service Agreement (Scope of Work)

This is arguably one of the most important agreements you as a business owner can create. It outlines your entire Scope of Work and the services you intend to provide your clients. Being crystal clear on this is of the utmost importance. The last thing you want is a misunderstanding with your client! Customer service is King in marketing for a reason and clients talk. More is more when it comes to the details of a Service Agreement because there are so many factors that go into its success.

Some of the main points a service agreement outlines include:

-Parties Involved: All parties, persons and LLC’s involved are clearly defined.

-Service Duration: The expected timeline for the service to be done, such as 6-month and yearly contracts.

-Payment Terms: The actual dollar amount agreed upon by all parties and other factors like when payment is expected and how it will be sent.

-Schedule of ‘Services’ Delivery: If applicable, the agreement may include a schedule or timeline for when specific services will be performed or delivered. Cover whether this timeline is fixed or variable depending on the circumstances.

-Performance Standards: The standards of how the job is to be performed such as the quality, response times, and service availability agreed upon by all parties.

-Insurance and Liability: In case of accidents or emergencies, it’s important to assure your insurance and liability. Make sure these are all outlined beforehand in the event of a loss or any damage.

-Responsibility of Both Parties: Specifying what each party must contribute or provide to ensure successful service delivery.

-Termination Clause: This part of the agreement specifies the conditions under which either party can terminate the contract, including notice periods and termination fees if applicable.

-Confidentiality + Data Protection: If sensitive information is involved, it’s important that it’s protection be outlined to establish trust between both parties. This can include an NDA (non-disclosure agreement).

-Dispute Resolution: In the event of a dispute, details and procedures of how to resolve them can go a long way in your Service Agreement’s success. Determine whether it includes mediation or arbitration. Knowing what to do when/if conflict arises can keep you and your client away from a potentially negative outcome.

-Amendments- Clearly define the process of how both parties can amend or update the contract.

-Governing Law: The jurisdiction and governing law under which the agreement is enforced are specified.

All in all, being pro-active about your business agreements and budget can not only save you thousands of dollars but the time and stress of dealing with avoidable mistakes. When you stay on top of your business budget, your employee agreement and your service agreement from the start, you set up your company to have a successful chance to thrive. In such a competitive market, any leg up you can get is worth its weight in gold! It takes intentionality, time and analysis but I promise that you’ll be happy you did down the road.

Developing your budget from the beginning also gives you a clear picture of where your company is headed. When you’re staying consistent with the budget then you set your business up for success Clearly define and articulate your goals like we talked about in Step 1 and watch how with time and consistency, you meet them. I wish you the best on your journey navigating business ownership and hope you learned something here that you can put in your back pocket for a later day! If you want your contracts done for you or even your payroll for your staff, send us a message or click the link below to get your business as financially efficient as possible!