Lessons from Hiring Contractors

by Rick LaPoint April 28th, 2011 

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I am not an Attorney, I am not a Lawyer. What follows is nothing more than my own personal thoughts, regarding my own personal experiences. Do Not assume what follows as Legal Advice in any way. Seek Authorized Legal Council before entering into any Legal Agreement of any kind.

There comes a time in every entrepreneur's business life when it makes sense to invest in some outside help.

Maybe you need a Data Base, or a Website, or an Online Store.

Whenever you require something that falls outside your area of expertise, it can be very wise to hire an expert.

A Contractor is Not an Employee

I have been rebuilding a house for the last few years, and I have come to the point where I really hate Contractors.

A Contractor is not an Employee. When you hire an Employee,  you can decide on and control almost everything they do. A Contractor gets paid for Results, and you can't always control how they go about getting them.

A Contractor works under the terms of a Contract (hence the name, Contract-tor) and they will religiously adhere to the specific Written Terms of the Contract"providing those terms are in their own favour.

Terms that favour you, on the other hand, may not be so rigorously enforced. And the last thing you want to rely on is verbal assurances. Therefore, always heed the old saying:

A Verbal Contract is Not Worth the Paper It's (not) Printed On

I don't believe Contractors who say,

"The verbiage of the Contract is just a formality."

When Push comes to Shove, the Written Word is all that matters.

  • Never allow a Contractor Salesperson to interpret the Written Word of the Contract with a Verbal Lie.
  • Never allow their Verbal Reassurances to screw you.
  • The only thing that is real, in a Court of Law, is what is Written in the Contract.

If you are given a Verbal Assurance, be sure to get it included in the Contract, even if it's only a Handwritten Amendment.

Some contracts have Designated Areas specifically for the purpose of Handwritten Amendments.

Warning: Sometimes it is necessary to contact the owner of the company to verify the Salesman has the authority to engage in such Contractual Amendments.

There are times when an Agreement that you believe was negotiated in Good Faith is later overruled by a "Higher Power" who claims the Salesperson didn't have the Authority to make such an arrangement, therefore the Handwritten Amendment is Void.

Always make sure your Negotiator is Authorized to Negotiate.

The Car Dealer Game

I have experienced this one several times at Auto Dealers. They have a predetermined Game they play to Sucker you.

The Rules of the Game at a Car Dealer is to entice your Emotions into "The Deal," and then have the Rug Pulled Out by the Manager. Then the Salesperson offers you a "lessor" Deal.

"I'm so sorry. My Manager didn't Approve our Deal." :-(

You are already Emotionally drained from investing hours working the first Deal.

I watched, all day, as a family began the process. By the end of the day, Dad walked out of the Contract Office white as a sheet. He looked like he was going to throw up. The Car Dealer played with his head to the point where they Owned him, quite literally.

When I walk into a Dealer to buy a car, I pack a lunch. My goal is to wear Them down ;-)

Always Negotiate From Strength

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The Lesson above teaches something very important: Always have the Upper Hand in any Negotiation. Never, ever allow yourself into a situation you do not control.

Or, as intoned by my favourite character from the X-Files, Cigarette Smoking Man,

"Always control the Board."

If you do not have the Upper Hand, seriously consider walking away from the Deal. If you don't control the Deal, you are likely to suffer Buyer's Remourse down the road. ALWAYS be willing to walk away from a Negotiation, Deal, Contractor, or Salesperson if you feel uncomfortable, or, cannot get the Deal you want.

Be Careful When You Hire

I mentioned my Contractor Traumas. After the last Contractor I hired, I may require years of Therapy :shock:

I  recommend you always get a list of past Customers you can contact directly. By talking to a past Customer yourself, you are able to ask questions or follow a line of thought brought up by them during the course of the conversation that you many not have thought of yourself.

And one thing I have learned is that Cheap in not necessarily a Bargain. Also, there can be a significant difference in Quality between Contractor #1 and #2, yet not a whole lot of difference in price.

Be Ruthless about What's in Writing

Here are few points you should probably make sure are included in any Contract. Keep in mind that I'm not a lawyer, and this is not Legal Advice. It may be wise to consult with an attorney before binding yourself into any contractual agreement.

  • Start Date & Completion Date – And any additional Dates where Approval or Payment must be given before continuation
  • Description of Work – Each stage must be detailed with as much depth as possible, with Final Approval by the client (you) before considered "Complete"
  • Price and Method of Payment(s), as well as a Payment Schedule if applicable

The Other Side of the Fence

What if YOU are the Contractor?

Many bloggers are tempted to hang their shingle and earn some extra income. After developing some hard-earned skills from working on their own blogs, many bloggers believe they can make money by doing the same for others.

Having a good standard Contract for your clients to sign is an essential part of your business.

As a Contractor yourself, you want to be sure to protect yourself. But at the same time, you want to give real value to your Clients. Therefore, it's in everyone's best interest to make sure absolutely everything is clearly specified in the Contract.

The more clearly and detailed you specify your Services (what you will Do, Create, Draw, Post, ect…) the less "misunderstandings" will arise down the road (of which you may have to Defend yourself against in Court.)

The Ugly Part of Any Contractual Agreement

Here is something really nasty I have learned over the years:

In the old days a man was as good as his word.
A handshake sealed the deal.

Today the deal isn't sealed until the lawsuit has been finalized.
And requires even more legal wrangling to Collect the Judgment.

Unfortunately, that is the world in which we live. This is why it is so very important to invest the time to do your Homework in advance of an Contractual Agreement.

And why you want to do all you can to build your own Reputation for Honesty. Reputation is everything. Just as you value your own Reputation in the business world, you must be diligent in finding Contractors who value theirs just as much.

Contracts Can be Cordial

I certainly hope all of this hasn't spooked you away from the common, everyday Contract.

Many, if not most, everyday business deals work out quite well, and end quite happily for all parities involved.

But making sure everything is "on the table" right up front goes a long way in keeping things working smoothly from start to finish, without misunderstandings that work against the finished result.

Rick LaPoint

RickLaPoint has years of experience with Inside and Outside Sales & Marketing. He has developed software products with C++ for anticipating turning points for stocks, forex, and futures, and has given many live presentations teaching technical analysis skills. For more of Rick's Online Business Ideas visit his website.

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