Having Formal Terms & Conditions for Your Business
What I’m talking about is the perspective of terms and conditions. So, you’re offering goods or services, and you want to let people know what the deal is. This is different from collaboration, because when you collaborate with somebody, which I’ve dealt with in a different blog, you negotiate and you agree how it’s gonna go. When it comes to terms and conditions, you decide how it’s going to work.
Now, I have met some clients who are hesitant about putting terms and conditions together because they say, “Oh, I trust my clients, and my clients trust me.” Honestly, that is a recipe for disaster and I think it’s actually more respectful to your clients, to have terms and conditions and explain to them, “This is the deal, this is how I work, this is how I operate, and these are my expectations of you.” So, when you’re thinking about doing terms and conditions, you need to think about what your obligations are, what’s your client gonna get for their money? Is it an online course? Is it ongoing support? Is it a physical product?
Be careful of putting forward warranties or guarantees on physical products in excess of what you need to by law, because you might find yourself liable when you don’t need to be liable. For example, you might say, “I guarantee it’ll reach you in good order,” but then, if the courier drops it and breaks it, while it’s not your fault, you still have to replace it, because of what you’ve said. Think about what it is that you’re offering and be quite clear about it.
I’ve got several clients who sell homemade pet food. They start off making it at home and then they’ve progressed into making little mini factories. One lady had an issue and when we brainstormed her terms and conditions I said to her, “think about the terms and conditions as a way to really engage your customers. Tell them something about your values and how much you can offer them.” So I brainstormed with her, and said to her, “one of the difficulties that I have, when I change pet food brands, is that I’m always worried that my dog won’t eat the new brand.” And in fact, I said to her, “I’ll buy a bag of your food but my dog is really fussy and he might not like it, so I don’t want to spend lots of money on something that he might not like.”
She said “oh, but I offer a refund if your dog doesn’t like it.” and I said to her, “That’s the kind of thing to put in the terms and conditions, you might as well use your terms and conditions, to highlight how generous you are.” So then we brainstormed a little bit more and I asked her, “how would you deal with it, if say somebody’s in a different State? You give them their money back but you don’t want the dog food back?”
So we decided the greatest thing to do with this unwanted bag of dog food for her customers, would be to ask the customer simply to drop the bag off at the local RSPCA. So we included that in her terms and conditions. “I will give you your money back, 100% no questions asked, if you drop the bag off at the local RSPCA.” We debated whether or not the client needed to send a photo of them doing it and in the end we decided no, we’ll just trust them.
We don’t actually know what they’re going to do with the bag of food. They might throw it away but that wasn’t the point of the term. The point was to show, one, that she’s generous, two, that she really cares about animals, and three, that you can trust her. Because she’s not going to benefit, if you don’t want that bag of dog food by her asking you to give it away and giving your money back. Ever since we changed her terms to include that, she never had any requests for refunds. So you can see by these stories, that when you do terms and conditions, you can really use them to foster good relationships with your clients.
The other thing that’s really interesting about terms and conditions and important to include, is if you get any problems in your industry or in your business, future-proof your business by including those in the terms. I have a client who is an electrician and he installs big fridges and freezers for supermarkets like Woolworths and Coles. He found that he was getting recalled to come and look at fridges and freezers by the same customers continuously and what he found was that the customer sometimes didn’t know that or didn’t realize, that there’s an air intake near part of the fridges and you have to keep that air intake clear.
If you don’t, they get really hot and then the fridge or the freezer overheats and then it kills the motor. People were complaining about his work when it wasn’t his work or his parts, it was the way they were caring for the equipment. So we changed his terms and conditions to say that people had to care for whatever he had installed, and then he would give them some instructions on how to do that, like keeping the airway clear.
That change to those terms and conditions had the added benefit of people not making claims when it was their own fault for ruining the machinery. Another benefit was that the machinery actually lasted longer, so people loved him more because they thought that he’s a better electrician because when he puts the equipment in, it doesn’t break.
So if there’s anything like that in your business, it’s a good idea to capture it in the terms and conditions. Another example would be if you are a business coach or any kind of coach, so you teach somebody how to be good on social media, or you teach people about creating publicity. To put into your terms and conditions, what you expect the client to do. I’ve got quite a lot of clients who are coaches and one thing they found was that once people sign up, sometimes they actually expect to somehow gain the knowledge and skills without doing very much.
One client I’m thinking of in particular, Judy, what we did with her terms, is that we actually put some minimum things in there that we expected her clients to do. So it might have been, reviewing their business once every second week, following the action plan that she set out for them, or making a note if they couldn’t follow it, and why they couldn’t follow it. So setting out very clear expectations, suddenly not only were Judy’s clients actually succeeding in what she was teaching them, because they were actually following her program properly, but they loved her more for it because they were clear on what their commitment was.
She did get a few people who didn’t actually sign up; they went, “Oh no, I don’t have time to commit to this.” But that was perfect for both Judy and her clients, because now she wasn’t getting people signing up who weren’t in the right place to work with her. So, your terms and conditions can sometimes also act a little bit as a filter. To make sure that you’re getting the right people. Because if you’re not getting the right people, that’s when you start to get complaints, and people get unhappy.
A question I get asked is, whether you can just use standard terms and conditions from the internet. I have dealt with that in another blog which I will post up on the same module, so that you have got all the information together. I’ve put out very clearly there, why I think that’s not a good idea, and you could be doing yourself more harm than good if you do that. If you find that you don’t want to work with a lawyer or you’re not at that stage yet where you’ve got sufficient funds to work with a lawyer. Honestly writing down some bullet points and creating your terms, in words that you understand and that your clients will understand is a very, very good starting point.
It needs to be a living breathing document so modify it as things happen. For example, you might decide you are not going to offer a refund and then people get unhappy so you change that. As your business changes and grows, your terms should change and grow. You’ll see how things work and if they don’t work, then you can modify things slightly. I always believe that it’s a good idea for every small business owner to make friends with a lawyer. Because if you’ve got a lawyer who you are friends with, they get to know you and know your business and then they can create terms that reflect you, your personality, your ethics, and exactly how your business works.
I recently got a new client who had fired her previous lawyer, who she hated, and I asked her, what went wrong. She said the previous lawyer had no understanding of what it was that she did. So it’s very important to make sure that when you get somebody to draft terms and conditions for you, that they really understand, not only your industry, but actually how your particular business works. If you get some terms and conditions that you can’t understand and you are not sure what they mean, then that’s not really going to work well for your business.
You need to make sure that you understand the terms and your clients can easily understand the terms as well. In the case of this new client of mine who fired her lawyer, she said when she asked them to explain to her what the terms meant they got angry with her and treated her like an idiot. So she was clever enough to realise that they weren’t the right lawyer for her, I mean, if you can’t understand what your terms say, how are you ever going to enforce them and how are you ever going to explain them to your clients. So terms and conditions are important, have them in writing, so that there’s no misunderstanding, but make them clear and easy to understand. All the best with your terms and conditions.