3 Reasons Why I Don't Require Contracts (And Maybe You Shouldn't Either)
Ok, so this may shock you…. Unless you read the article title before clicking on it, then you already know what I’m going to say. (But it’s still a little shocking!) I am a service-based business that doesn’t require my clients to sign any kind of contracts. We work month to month, and if they decide they’re done, we part ways as friends.
Does that sound strange to you?
Well, there are 3 big reasons I’ve structured my business this way, and they all boil down to the same thing: no contracts = better client relationships.
Past experiences create a negative perspective
Bad past experiences definitely shape our realities. No matter how we try to shake them, they affect our mindset moving forward.
By the time companies come my way, they’ve typically had a few bad experiences under their belts. A marketer who promised the world and didn’t deliver. A marketer who wasn’t responsive and didn’t care about their project once the invoice was paid. A marketer who was very enthusiastic but not terribly skilled. You name it, my clients have experienced it.
And because most service providers require contracts, the companies were locked into working with these providers regardless. This is a huge problem for startups, as they’re trying to see big strides while working on a small budget. A few months of marketing dollars down the drain isn’t just a set back—it could sink a business entirely.
Lack of contract creates peace of mind
So knowing all this, I wanted my clients to understand that they had an “out” with me. I wasn’t going to trick them into being stuck with my services just to make my income more stable. Yes, I’m running a business, yes, but I’m running it to serve them. (That’s key.)
Removing a contract from the equation creates peace of mind. It dissolves the barrier to entry you might normally experience while a potential client agonizes over all their options. Instead of thinking “Oh man, I really like her, but what if she’s all talk and we’re stuck with her for 6 months?”.... They’re now thinking, “Wow, I really like what she brings to the table. If we get started and it’s not a great fit, we can pivot and find someone else”.
Startups need to be able to pivot; it’s essential to keep their strategies fresh and effective. Taking on a new team member is a big decision, so lack of a contract makes it easier for them to get started and quickly.
I don’t need a contract to keep a client
So here’s the thing about stable income from someone who works in the gig economy: it doesn’t exist. Shackling a client to you for a few months won’t change that. If you didn’t do a good job for a client in the 3 or 6 or 12 months you had them under contract, you’ll be looking to replace them before you know it. However, if you do solid work for a client, they’ll be happy to pay the next invoice, and the next invoice, and the next invoice.
You see where I’m going with this?
The best way to maximize by customer lifetime value isn’t to lock clients in, it’s to do good work. I don’t need contracts to keep clients around because I care about their success, and I work hard to help them achieve it. When you treat people well, they won’t be looking for someone to replace you.
So you may be asking yourself, “Why do no contracts = better client relationships?” It’s simple: by eliminating contracts in my business, I’ve been able to address some big pain points my clients usually have. 1) They’ve been burned before. 2) They can feel safer in our business relationship. 3) I know they’ll only keep me around if I’m valuable, so they know I’m highly motivated to see them succeed.
We work together to get results; I don’t see them as an invoice to be paid, but rather as a team I contribute to. That mindset has led to the elimination of contracts in my business, and business has never been better.
Meet the Author: Shauna Armitage
Shauna is a Marketing Director or Fractional CMO helping early-stage startups scale with effective strategies, creative solutions, and unparalleled integrity by making the most of small budgets for maximum impact.
As a vocal advocate for women in business, Shauna is on a mission to redefine what it looks like to be a working woman and to support other women doing the same. She spends her free time traveling with her husband and four kids while drinking Coca-Colas. Connect with her on Instagram at @shauna.armitage.