Often in my talks I am asked for advice or tips about running a startup. Invariably, I come back to a principal that I implemented close to a decade ago, and it has saved me more times than I can count. And when I became a lawyer, I really began to understand how powerful it can be.
Simply put, whenever you have a verbal interaction where any kind of deal is made, follow up ASAP with a written email. Sounds simple, right?
Here’s an example. Often I am on the phone with a client or business associate, and we strike some kind of deal. To give a real life case, let’s say that I have chosen to sell a picture, and the client and I have settled on a price of $2500 for a matted and framed image in the size of 24x36. I’m excited, they are excited, and I start making the image. BUT…
Before I go any further, I immediately send an email to the client (who, remember, I just got off the phone with) and say the following:
Great to talk to you today. As we agreed over the phone, I am making the image you requested in a size of 24x36, and I will be delivering it matted and framed. The price we agreed upon is $2500, payable 50% up front, and 50% on delivery. Excited to work with you!
Short, clear, and takes 60 seconds. Look, however, at what occurred. We now have a written record that: a) the client and I spoke today via phone; b) we settled on a certain price and payment schedule; and, c) the payment is for a certain piece in a certain size and finish.
Just trust me. It works. Not only do you get all the benefits above, but you have put psychological pressure on the person not to change the terms or reneg on any of the parts of the deal.
Finally, and this is important, this email is what is known as a “contemporaneous writing.” That is, something that occurred at the same moment in time as the verbal agreement. Even if the client doesn’t reply, the mere fact you sent the email the same day shows a deal was made. While it is not bulletproof evidence, it is SOME evidence, and I have used emails like this as the basis for demand letters for payment and other reasons.
All in all, start making this one change to the way you do business and you will see the number of “misunderstandings” go down precipitously.