Every small business owner likes to believe in the value of their word. Maybe because it hearkens back to the olden days when “spit and a handshake” were all that were needed to close a deal. Unfortunately some of the personal aspects of business have been lost in our global economy. Getting things in writing is increasingly important.

I’ve heard the stories and seen the movies where a massive deal is done and the only agreement is a handshake. This typically was used to demonstrate the value of the other person’s character and the level of trust established between the two individuals. There are several reasons though why this is not the best practice for today’s businesses.

Paperwork Provides Clarity

Working on a project with a prospective client it can be very easy when sitting around the table to begin throwing out ideas about what could be accomplished and what could be done during the project. One thing leads to another and suddenly there is a miscommunication between expectations and deliverables. If you talk about grand ideas with your potential clients and then agree to complete the work verbally without a clear, defined, and written scope of work you will find yourself in a bad situation.

Your client will believe everything discussed will be accomplished in the first iteration and at the cost originally provided. You’ll believe you have lined up successful follow-up work to be completed after the original project and both of you will be disappointed. Writing up specifically what will be accomplished, what timeframe each will take, and what the associated costs are will help to set proper expectations. No one will be surprised and everyone will feel more comfortable and confident in the arrangement. Taking the time to write things out will provide clarity and reassurance.

Paperwork Provides Accountability

Yes, there is something inherently motivating about the idea of a verbal agreement. A demonstration of mutual trust and respect in the other party. However, unfortunately if there is no agreement that is written and signed by both of you then you’ll be more prone to failure. The act of drawing up paperwork and both agreeing and signing this agreement is not a sign of distrust. Nothing could be farther from the truth.

A proper agreement demonstrates the desire to go beyond mere trust and shows commitment to the process. You are willing to hold yourself accountable by signing your name to an agreement you’ve helped to create.

This accountability shows you as the provider are confident in defining exactly what should be done and you agree with the clearly outlined tasks and objectives.

Paperwork Provides Opportunity

When drawing up a draft of what should be accomplished you can use this time to take things beyond just providing clarity and accountability. You can seize this opportunity to outline future steps as well as identify additional services you can provide. Again, remember if you are in a purely verbal situation there are many opportunities for miscommunication and misunderstanding about goals and included tasks. Once you have written them all down you can more easily see areas where you can provide additional value.

Opportunities exist for both sides. The prospective client has an opportunity to see how you work. This gives them insights into how you run your business. Do you focus on the details? Do you take the time to listen to them and then relate their needs to outcomes? This is an excellent opportunity for the client to get a real-life first-hand look into how you do business.

Paperwork Provides Legitimacy

The last point is perhaps the most practical. While some may argue the above points as areas which could be addressed in verbal agreement situations, this last one holds very tangible benefits. In most courts (at least in the United States) the signing of an agreement is considered a legal and binding document. As much as we would all believe there is never going to come a time when legal counsel needs to be involved unfortunately the reality is you should always be prepared.

The signed agreement helps in creating clarity, defining tasks, providing opportunity, and encouraging accountability; but ultimately it serves to protect both parties in a legal situation. Every business owner trusts it will never come to the point where the legal approach has to even be considered. But every business owner should be prepared in the case it becomes necessary.

Demonstrate Excellence

Small business owners embark every day on a perilous journey of establishing their name, their credibility, their trustworthiness. Although the first thought may be that a verbal agreement demonstrates trust and commitment the reality (as outlined above) demonstrates that getting it in writing will improve business and help to establish them much much more. Use this opportunity to demonstrate excellence.

Be smart about how you conduct your business. Use the opportunity of writing up an agreement to demonstrate how well you’ve listened to the client’s needs, how focused you are on providing them the perfect solution, how well you understand the tasks to be completed, and how committed you are to not only the immediate solution but to a long-term relationship with them. This builds far more trust. This goes much further than a slimy, germ-covered handshake ever could.