Statistics for 2022 from the Small Business Administration found there are about 3 million small businesses in Florida. Given the positive entrepreneurial climate, you may be considering expanding your company. Since business growth can require the help of experienced professionals, you might contract with a management company to take over one of your operations.
Signing a solid management contract could make the difference between a harmonious relationship and one fraught with problems and even legal conflict. Here is how you can fortify your agreement so it protects your interests.
Define work duties and establish limits
When a management business assumes control over a part of your business, the manager should only work within the parameters you have established. So if you need a company to run your bookkeeping, your contract should make that clear. A strong management agreement describes both tasks and operational control, limiting what the company can control in your enterprise.
Describe payment terms
To avoid conflict over pay, your contract must establish how to compensate your manager. Expect that your management company might negotiate for specific terms. Some managerial companies receive a fee per month or year. Others opt for a percentage from profits generated by the business they serve.
Set a duration limit
Your contract could have a problematic loophole if it does not curtail how long your management business works for you. If you have a fixed time period in mind, you may include a provision to terminate the agreement after a few months, a year or multiple years. Your contract should also give you authority to end the relationship early if your manager fails to perform according to your wishes.
Not all business owners can avoid disputes with their management companies. Still, properly preparing and negotiating your contract could keep you from unnecessary litigation.