It's All About Business™

Dear Readers,
I’m writing this post to get you thinking about your business. And what you should do before you sign a contract.

“Penny Wise and Pound Foolish” is an English saying (idiom) dating from 1607. It appears to be attributed to Edward Topsell (or maybe Robert Burton). The Phrase Finder says “The meaning of the phrase is something on the line of ‘saving a little money only to lose a great deal more due to their own stupidity.’ ” And Collins English Dictionary & Thesaurus defines Penny Wise and Pound Foolish as “greatly concerned with saving small sums of money.”

The phrase should be in the mental toolkit of every businessperson.

Here is a recent experience I had that illustrates the saying:
A few weeks ago, I was talking to a business owner. She was lamenting how a business deal had gone sour and wanted to know her alternatives.

Her real problems (there are many) arose when (or before) she signed the contract. I could go on with the problems in her deal, but these four are the biggest:

1. The contract price was USD $1.9 million.

2. She is not an attorney.

3. She drafted the contract.

4. She never had an attorney review the contract before she signed it.

She was already upset and I didn’t want to add to her pain. So I didn’t ask why she didn’t talk to an attorney before she signed the contract. And I didn’t ask why she drafted a contract for $1.9 million when she isn’t an attorney.

Too often, we don’t call an attorney before we sign contracts. We are worried about how much it will cost to talk to an attorney. Or how much it will cost to have an attorney review the contract.

But if we never make the call, we can never know how much it will cost.

Here is a simple test you can use:
A. Always ask yourself, “How much is this deal going to cost me if it goes sour?” In other words, what is the dollar amount of the contract?

B. Then ask yourself, “How much am I willing to spend to protect myself on this deal?” In other words, how much will it cost to have an attorney represent you in the deal?

Compare A to B and make an informed decision.

Then you won’t be Penny Wise and Pound Foolish.

And one final comment on the subject: If the other person doesn’t want you to have your attorney review the contract before you sign, you should be VERY careful.

Have you had experiences or seen this happen? Do you agree or disagree with what I’m saying?

Please post your comments and opinions on this subject.

Thanks,
Larry