How To Use Business Contracts To Prevent A Single Point Of Failure

How To Use Business Contracts To Prevent A Single Point Of FailureBusiness contracts can help prevent your company’s cascading collapse caused by a single point of failure (SPOF). Did you know that one of the biggest mistakes entrepreneurs make is running their ventures so that a SPOF can wipe out everything?

In fact, most small businesses are riddled with SPOFs ready to explode like a land mine when you can least afford it.

For example, let’s say you have a worker (employee or independent contractor) that’s vital to your operations who needs to take a week off to attend a parent’s funeral. If the worker’s absence brings your company to a halt, that’s a SPOF.

Or your software developer acts like a prima donna, making unreasonable demands or not timely delivering. Will your business be held hostage?

Related Article – B2B Contracts: How To Avoid 4 Common Mistakes

And for business owners, the most vital SPOF is the one you see in the mirror, i.e. your business can’t survive without you. Your vacations (if you take one) are 24/7 working vacations where you’re checking text messages, voicemail, and emails to make sure everything’s running.

How To Prevent SPOFs

It doesn’t have to be that way.

Build in redundancy by cross-training workers and finding alternate sources for vital products and services.

One of the best places to start eliminating SPOFs is to identify all of the key tasks that must be performed for your business to function smoothly (including your own responsibilities) and make sure there’s at least 2 to 3 people who can handle those tasks.

The Importance of Business Contracts For Avoiding SPOFs

Then use employment contracts and independent contractor agreements to formalize those responsibilities with each worker to ensure you’re protected. Our firm prepares these types of agreements as part of a Business Contract Legal Protection Package.

Let’s face it. Because it’s essential to your company’s success to make sure no one becomes a fatal bottleneck, you need to put the right business contracts in place to prevent your operations from grinding to a SPOF halt.

Author Mike Young, Esq.

Internet Lawyer Mike Young provides contracts and other efficient legal solutions to business owners and C-level executives of privately held companies. To get legal advice from Mike, click here to set up your phone consultation with him.

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