Businesses face many challenges in day-to-day operations; customer service, stock control, marketing, and so on.
Behind the scenes, one of the biggest challenges can be ensuring that contracts are well-written and contain all relevant details.
Many businesses now work with minimum viable product (MVP) contracts to cover all their bases. In this article, we will look at what MVP contracts are, how to create them, and how PandaDoc can help.
- MVP contracts simplify things for teams across your business’s various departments.
- They allow documents to be turned around and signed much more quickly.
- Helping your team understand contracts helps streamline the sales process.
- The fewer things in a contract that need clarifying, the more efficient the process is.
What is a contract?
A contract is an agreement between two parties that can be in any field of business. It may be signed in person or may utilize virtual signing to seal the contract.
The contract will list details and any mutual obligations between the parties, obligations that can be enforced by either (or both) state and federal law.
What is contained in a contract will vary according to the type of contract it is, but there are several elements that will likely appear in any contract:
Both parties have agreed on all details contained in the contract and mark that agreement by either a handwritten or virtual signature.
The contract meets all legal requirements that may be governed by state or federal law.
Offer and acceptance
One party will usually be providing a product or service and the other purchasing that product or service.
The contract should contain all details of the offer and the buyer’s acceptance of conditions.
The contract should identify each party’s capacity and position and their right to make and accept all the details contained in the contract.
What is an MVP contract?
Even a small business is likely to utilize hundreds of contracts in a financial year, and for larger businesses, that number could run into thousands or more.
Can you imagine how overworked your legal department or team would be if they had to create each of those contracts from scratch?
An MVP contract takes what you view as essential elements that you want to be included in every contract (though, of course, there may be room for negotiation on some of those elements).
For example, you may have a standard payment period, such as the full balance to be paid within 90 days of delivery.
In essence, your MVP acts as a template for all your contracts.
This helps make the legal team’s job easier and means that turnaround is quicker and contracts can be signed in a timely manner.
As your business grows, MVP contracts can be integral to efficiency and growth.
How to create an MVP contract
Negotiations may be protracted, but once an agreement has been reached, you want the contracting process to be expedited.
When a legal team has to construct a brand-new contract, it can take time – and more negotiations – to ensure the contract is to the liking of both parties.
An MVP contract reduces the time taken to sign a contract.
Particular details in an MVP contract can be discussed during negotiations, so there is nothing ‘new’ to the parties when it comes to signing.
For any busy business, being able to expedite the contract process can be an essential part of their operations.
Step 1: Comprehensible documents
You’ll probably have encountered almost incomprehensible legalese before that has left you scratching your head.
Although contracts may be signed off by both parties’ legal teams (if they have them), they need to be understood by the people in the teams negotiating and agreeing to the terms contained in that contract.
That means that all the contract documents should be understandable by any of the teams involved in agreeing to the deal.
No legalese, no jargon, just clear language and terms that means parties can agree to all terms with minimum input from legal professionals.
In an ideal world, your MVP contract template should allow the parties to work through any negotiations and agree to the details in the contract.
You want your focus to be on closing a sale or agreement rather than arguing over minutiae that can be set out in an MVP contract.
Step 2: Training
Your sales teams are generally focused on one thing: sales.
They will have in-depth knowledge of your products or services, and they will also know what they can offer in the way of discounts or offers where relevant.
What they may not know is any contractual law or legal ramifications when it comes to breaking a contract.
If you decide to implement an MVP contract system, one thing should be clear; you are not training your sales teams to be lawyers!
What you do want to do is to offer them comprehensive training in the MVP contract process and how legal responsibilities fit with any agreement made between parties.
It’s no different from adopting any other new system.
The staff involved in any process not only have to understand the primary responsibilities of their role, they also have to understand their place in the entire process.
Helping them understand the MVP contracts they are working with and when to engage with your legal department can help streamline the sales process.
Step 3: Establish a system
Of course, any new process may not work perfectly at the start.
As with other systems, you need to implement monitoring and tracking that measures the success of your new system and allows you to make changes when and where needed.
Be aware that this will not lead to overnight success and may be a lengthy and ongoing process.
Depending on the size of your business – and legal team – you should consider appointing someone from your legal team to take responsibility for implementation and to guide your sales teams.
This person (or people) can be the point of contact when your teams – inevitably – have questions about what something means.
You can use tools and integrations to ensure there is an open pipeline between sales and legal and that there is a clear demarcation between queries about MVP contracts and other legal-related inquiries.
You can also allow your legal team to access systems such as CRM so that they have a comprehensive overview of the current negotiations.
Step 4: Revisions and follow up
It is important to note that MVP contracts are part of an ongoing – and continuous – process.
Your initial MVP contract template may change radically from the one you may be using a year later.
You also need to consider that some of the details involved in an MVP contract may change, as well as the laws and regulations governing any contracts.
Another factor that needs to be thought about is scalability. Every business wants to grow, and a sound MVP system can be intrinsic to business growth.
After all, the quicker a sales team can negotiate and agree on a contract, the quicker they can shift their focus to the next lead in the pipeline.
Communication is key for an efficient MVP contract system. Not only between sales and legal teams but from every involved party in your organization.
In the beginning, that communication may be between sales and legal managers but can progress to include C-suite executives and even IT management when tech systems need to be implemented.
Make your MVP contract process easier
The whole idea of using MVP contracts is to simplify your existing procedures and systems.
How many times have you felt your sales process was delayed and/or disrupted because you or the other party has had questions about the details contained in the contract or has needed clarification on what something in the contract meant?
MVP contracts should seek to simplify and streamline the process so that there is little input from your legal team.
Having a solid MVP template means that all negotiations focus on details such as price and delivery date rather than any legal aspects that might apply to every deal you complete.
Your MVP contract template should standardize aspects of your processes that you want to be included in every deal you complete.
These can include factors such as payment, delivery dates, as well as mention of any applicable laws that relate to how you do business.
PandaDoc’s contract management software enables your company to take the headaches out of the contract creation process.
Choose from hundreds of customizable templates and use our software to collaborate with your teams smoothly.