Startup Businesses & Growth with Contract Management

Startup Businesses & Growth with Contract Management

When starting a new business, contract management and the implementation of correct processes and best practices are not likely to be at the top of the agenda. However, having a good contract management system in place is essential for business growth, regardless the size of your enterprise.

By implementing and then practicing good contract management, a business has a firm and secure base from which to build their business. Any growth is good, but if you haven’t got the foundations to support your business as it scales up, then you are more likely to have a poor outcome. Lost revenue is not just an issue for smaller startups, it can actually be a business killer.

 

Why don’t Startups utilize contract management?

In the beginning phase of starting a business, there is not only the substantial number of things to consider and implement, but the continuing challenges that result in pushing a business forward with limited resources. As such, the risks associated with poor contract management are understandably disregarded as minor compared with the inherent and continuing risks of starting any business, so contract management gets forsaken in favour of solving immediate issues.

In most cases, contract management is performed manually, on an ad hoc basis, as and when it is needed. There is minimum oversight involved and it is only when startups reach a level of growth with an increase in contracts and complexity, that the negative effects of ignoring contract management processes are felt.

The problems most startups will find at this point, especially regarding issues over risk and management, is that these issues of growth and expansion will also apply to other areas of the business and a lack of resources will inevitably influence how much attention a solution to contract management gets in regard to other priorities and how well any solution is implemented.

Most startups are small enough to not need an full automated contract management solution and can mostly get by using manual processes. However, best practices still apply to any form of contract management, and it is this understanding that can make or break businesses when navigating the balance between growth and the sometimes limited resources available.

 

Why should startups implement a contract management system?

One word – Growth. This is essential to any startup in order to create profitability and revenue. It has been reported that poor contract management can cause bigger companies to lose out on up to 9% of their annual revenue, smaller businesses simply cannot afford that kind of loss, even if the amounts and percentages involved are smaller. Therefore, if you want your business growth to turn into a successful business, contract management is key.

No matter the size of your business, any contract you enter will require creation, time deadlines, scope, and deliverables. All of these will need continual monitoring and governance to assess for risk. The importance of managing contracts correctly from beginning to end is still vital for the effective administration of the business, regardless of company size. As reported earlier in the post, correct management can mean the difference between a growing relationship with clients and customers and therefore improving business growth, and a business failing to make it in their respective market.

Solving problems as and when they arise and the lack of risk management involved, means eventually many startups get caught out further down the line when the processes they have in place start to create pain points. Effective contract management means you can avoid those pain points altogether, or solve further issues depending on during what phase of growth your business has identified the need for contract management.

Effective contract management can improve productivity and efficiency, communication and relationships with clients, investors and vendors and mitigate the risks involved.

 

Contract Management Best Practices

Regardless of whether you want to manually manage your contracts, or implement contract management software, there are best practices that should be adhered to in order to get the maximum value out of each contract, minimise the risks and have a successful contract lifecycle on each of your contracts.

Start early. The earlier you implement contract management processes, the easier it is to manage your growth.

Having a central repository for all your contracts, documents and associated data can streamline your processes, help with version control, makes your contracts easily accessible for managers and can provide a base and stability from which to grow your business.

Negotiate and set contract KPI’s. Although manually managing this may prove tricky, KPI’s should be extensively used within contract management. Analytics can support fact-based decision making and getting the most out of a contract, as well as identifying poor performing contracts which may have an adverse effect on the business.

Contract reporting is essential for successful contract management. By regularly monitoring and tracking critical deadlines and deliverables, you can keep full control of the contract and avoid costs to the business. For example, contract renewals are an important provision that can often be missed if there is not adequate oversight and reporting of a contract.

Mitigation of risk is relevant to all businesses, in all industries, but is particularly relevant for smaller startups. Financial penalties from missed obligations or poorly performing contracts can have a far greater negative effect, especially when trying to grow a business.

Prioritize the high-value contracts. They need more negotiation and can provide a higher level or revenue for your business. This does not mean ignore the lower-value contracts, but they are more likely to be less complex and therefore monitored and managed far more easily.

Even if your business is in its initial stages and you have few employees and limited resources, this does not mean that contract management software is not right for you. Businesses should use any platforms or technology available in order to maximize their potential. Contract management software such as the solutions available from Symfact, can help improve the efficiency of your business and support growth and scalability.

Automated contract management has several benefits, by digitalizing your management process you can integrate it with various other platforms, making collaboration easier. You can set up notifications for all events and deadlines, create an audit trail and store all records, being paperless is good for the environment and your workspace! Contract templates and e-signatures quicken the approval process whilst security and identity features makes due diligence and risk assessments far more effective.

By streamlining all the process involved in contract management, your team will be able to handle the growth needed, whilst still retaining a high level of productivity.

Regardless of industry, if your business is a startup or is currently experiencing a period of growth, and you would like to implement either a full or partial automated contract system, then the contract management software from Symfact can offer a platform for scalability, stability, and efficiency. Please contact us today for a demonstration.