Yes, you need to manage statements of work
It’s easy for small businesses owners to feel like everything in the business media doesn’t apply to them. All the answers to business problems in slick business publication seem to be so pat and easy. Provided, of course, you have a huge budget and tons of employees and resources.
So it was nice to see a recent article on Inc.com’s website valid for any small business. In the article How to Outsource Without Going Broke or Insane Kimberly Weisul offers some concrete points that apply to any entrepreneur or small business.
What caught our eye especially, however, are her recommendations on creating a clear, concise statement of work (SOW). If your small business is still doing things based on handshakes, then you’ll want to read her recommendations on creating a clear SOW. In Weisul’s article, the recommended SOW includes: specifications, timelines, milestones, deliverables, frequency of meetings, and payment terms.
SOWs, the small-business friend
Many small businesses use SOWs as de facto contracts. After all – why not? Why pay a lawyer to draft a contract or go through the tedium of trying to find a contract template that fits your business when you can get it all done in a few plain-English paragraphs? So it may not be that unusual at all for a small businesses (especially a start-up) to have a drawer full of SOWs.
However, if you have a drawer full of SOWs, you could be making the same mistake as your larger enterprise cousins who are potentially losing revenue through unmanaged contracts. Industry organizations such as the International Association for Contract & Commercial Management estimate that between 6% to 9% of operating revenue is lost to poor contract performance.
Now substitute “poor contract performance” with “poor SOW performance.” Can your small business afford to lose that much revenue?
A rose by any other name still has thorns
The point is: small businesses need contract management just as much as larger enterprises, just for slightly different reasons. Your business may not have the hundreds (even thousands) of contracts that large enterprises do, but the money generated off of each SOW is even more critical to your businesses.
You may be tempted to track SOW elements “on the fly,” but consider the real benefits of using a contract management solution to manage all your SOWs. After all, a Statement of Work signed by two parties is a de facto contract.
A solution such as Contract Assistant Standard Edition (perfect for small businesses) allows the small business owner to do all of the following:
* Make all contract terms searchable in one database (rather than scattered across several Excel or Word files).
* Set an unlimited number of alarms to track timelines and milestones.
* Use default or customizable fields to record contract basics for easy retrieval and review
* Link related files to each contract record – providing an extra layer of timesaving efficiency to your agreements.
And perhaps the best reason of all for a small business owner to use a contract management solution: your business won’t always be small and you won’t always want to do SOWs for every business relationship. There will come a time when a full-blown contract is not just recommended but necessary. And there may come a time when you have dozens or hundreds to manage!
One of the hardest things for small businesses to do successfully is to adequately plan for growth. With a contract management solution, you are preparing for more business and better efficiency as well. That’s a win-win for any small business owner.
[About the author: Todd Hyten is a former business journalist who now writes about B2B topics and consults on content marketing. You can find him on Twitter and Google+.]