Using a Proposal Instead of a Contract With Your Client? Here Are the Risks
Are you using a proposal instead of a contract when you're working with clients?
I want to talk to you about how using a proposal instead of a contract might be putting your business at risk and your client relationship at risk.
First of all, it's important to say that using a proposal is better than nothing. So I'm not proposal shaming here.
But I believe in making business related decisions - and, side note, health-related decisions - with eyes wide open.
And a proposal usually doesn't cover everything that a contract covers, in terms of protection for your coaching or healing business. Contracts usually have more detailed terms and conditions.
So here are the four ways that you can be at risk or inviting some friction or tension into your client relationship with just a proposal.
1. Mismatched Expectations
By “mismatched expectations,” I mean, is there information on a sales page or on your website, that says one thing, but that doesn't completely match what your proposal says, a lot of times a sales page goes into huge, long detail about everything that's included and what you can expect and all of that stuff. Well, an ordinary contract usually has what's called a merger clause. And a merger clause basically says, this document right here supersedes and replaces any other writing, conversation, website copies, sales page that talks about this thing and this contract is the only thing that governs our relationship going forward. A proposal usually doesn't have that. So you can see where there might be friction or your client relationship might suffer if the client is not completely clear on what to expect, or what's included.
2. Who owns the intellectual property?
Who owns the IP? A proposal usually doesn't say that. By the way, IP is that wonderful, sparkly, magical, intangible property like copyright and trademark. Maybe you think that what you're creating for your client and delivering to them is your intellectual property, you're just giving her permission to use it because of the relationship that you have. And maybe your client thinks that by you delivering that to her, she owns it, and she can use it or sell it or use it to create her own client experience. IP ownership usually isn't talked about in a proposal and where there's ambiguity, there's room for a little conflict and risk.
3. Lack of termination language.
What happens if somebody wants out? That's not usually a proposal. A proposal goes into detail about what's included, and how much it costs, and maybe when payment is due. Maybe. What if someone wants to terminate after month one of a three month or a six month engagement? Do they have to provide advance notice? 10 days, 30 days? What happens to the money if somebody wants to terminate early? Is every payment non refundable once paid, no matter? What is? Are they on the hook for the whole compensation? Even if they terminate early, energetically, you've carved out that space on your calendar. Is there some kind of prorated reflect what is you the coach or the healer have to terminate early for some reason what happens then? Is the money treated differently somehow? Yes, probably in most cases, this will come up with clients, hopefully, at least. But I can't tell you how many contracts I've looked at where the termination clause wasn't super clear. And get get it can get a little bit messy with clients that want to terminate
finally, disclaimers and limitations of liability.
Think of disclaimers as the caution Wet Floor sign to cover yourself. And the limitation of liability is well, even if you slip and fall despite my very clear Wet Floor sign, we're only going to be responsible for x or we're not going to be responsible at all. They're there to cover you if things go wrong, no results guaranteed, we're not financially liable to you if your business doesn't make money. We're not financially liable to you if you are injured in some way. We are not medical providers, things like that. Proposals usually don't have this language, and that leaves you open to risk.
Conclusion
So to sum all of this up a proposal is a great start. But it doesn't replace a full contract with terms and conditions that are there to protect you and relying on just your proposal can set you up for some some friction and some risk. I hope that helps you to better understand the difference between using a contract and using a proposal.