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Contracts will inevitably play an important role in your growth and success as a startup — particularly in the B2B space. They are used to recognize revenue, close deals and build new business relationships — all of which are core to your business growth.
However, whilst signing more contracts is a positive sign for most fast-growth start-ups, increasing contract volume can quickly become a problem for businesses that aren’t prepared.
That’s why creating an effective contract process should be a priority for start-ups, even those that begin by managing just a few. Contract volumes can expand rapidly in growing start-ups, and you’ll need to be ready when they do.
Here are six useful tips for start-ups building a contract management process from the ground up.
1. Start as early as possible
Although you’ll probably find yourself managing a low volume of contracts in the early days of being a start-up, this can rapidly increase with time as your company continues to scale. It can be tempting to leave setting up a robust contract process until the need is undeniable, but failing to get an effective contract process in place in time could be what halts your growth, as bottlenecks in the process can prevent contracts from getting signed.
That’s why it’s key to begin working on your contract process as early as possible in your journey, as not only will building this process be considerably easier, but it will also prevent delays later on.
2. Get the basics right
When developing a contract process that works for your business, you need to get the basics right first. Usually, this means breaking down the contract lifecycle into various stages and setting up procedures for each stage.
For example, how will you approach negotiations, and which fallback positions do you have prepared? When a contract is above a certain value threshold, who should be responsible for approving it? How will you track your contract data — if at all?
There’s so much to consider, but breaking it down to decipher the best practices for each stage of the contract workflow is an important stage of building out your contract process and determining what works and what doesn’t.
3. Create a contract playbook
Whatever your contract process looks like, it needs to be outlined clearly in a centralized space where legal and business teams can see it. Usually, this is achieved by creating a contract playbook.
A contract playbook will consolidate your process and empower business teams to self-serve on routine contracts that don’t need to be sat with legal. This is particularly important as your contract volume grows as legal teams can’t afford to be buried in low value work within a scaling company, and contracts need to be managed without their constant oversight.
By creating a comprehensive contract playbook with all of the resources and answers required, commercial teams can get on with the contract process without needing to call upon your lawyers for support.
4. Avoid using multiple tools
One of the biggest challenges for businesses with manual contract processes is friction. More often than not, this friction is derived from the fact that most businesses still rely on a handful of different tools when managing their contracts.
For instance, most businesses still create contracts in word, amend them by creating numerous different versions, email them back and forth and then either scan and print them for signing, or convert them to PDFs for electronic signatures.
This creates issues relating to version control, causes mistakes and wastes a lot of time that start-ups simply can’t afford to lose. Rather than trying to manage your contract process across several different platforms, you should attempt to remove the friction by moving to a contract management software that allows you to create, edit, review, negotiate, sign and record all of your contracts in one unified workspace.
5. Start with routine contracts
When you’re beginning to implement your start-up’s contract management process, you ought to start by focusing on how to streamline the higher volume contracts that carry less risk.
The reason for this is that they don’t need as much negotiation as more complex legal agreements, and this means that you can familiarize yourself with your new contract process before rolling it out to the more challenging contracts, like venture funding agreements, for example.
Begin by looking at contracts that can be standardized, like NDAs, SaaS agreements and option agreements — if you offer them!
6. Set up integrations
Consider different ways you can make the contract process as efficient and stress-free as possible for those managing your contracts. One prime example of this is setting up integrations.
If you do decide to implement a contract management software, you may be able to integrate this with your systems of record for communications and CRM.
This means that if your sales team prefers to work in Salesforce, they can manage and create contracts from that platform. Similarly, if you integrate your contract tool with Slack, you can set up useful notifications when comments are left during negotiations.
This means that teams can collaborate more effectively on contracts as a start-up, and that everyone can stay in the loop.
The post How to Set Up an Effective Contract Process as a Start-up appeared first on Home Business Magazine.