One of the big mistakes you can make as a services provider is to enter into a business contract that holds you captive until the agreement ends…and sometimes even afterwards. This is true no matter what type of services you provide on an independent contractor basis (e.g., software development, copywriting, etc.).
How does it happen?
The typical services agreement with this trap essentially bans you from doing work for others during the term of the agreement (or even a period of years after the contract ends) in exchange for the compensation you’ll receive for providing services during the contract’s term.
Although you’re doing the work on a freelance basis, the contract puts you in the position of an employee (or worse) by forcing you to rely upon one client for your source of income. That’s a risky proposition for any services provider to be in.
- What if the client decides to not renew the agreement at the end?
- Or the client terminates the contract early?
How long will it take you to replace the lost income?
There’s a reason for the saying “Don’t put all of your eggs in one basket.”
Because relying upon one source of income isn’t stable foundation for an ongoing business or a sound plan for paying your bills.
An experienced business lawyer can make sure that the agreement you sign to provide services gives you the flexibility to have other clients simultaneously so that you’re not caught in a bind.
Remember, even if you do have multiple clients, it’s rarely a good idea to let one become your primary source of income. For example, getting 80% of your revenues from single client may seem like a good idea…until that client isn’t paying you.
If you need help with your services contracts, whether creating a template to use in your business, reviewing an agreement, or fixing a contract, it’s time to schedule a phone consultation with Business Lawyer Mike Young.