MMA Presentaton Info


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MMA Presentaton Info

  1. 1. The Power of a written agreement<br />Amber Beebe, JD<br />Owner – Beebe Systems, LLC<br /><br />
  2. 2. What is meant by an agreement?<br />Simply Put – An agreement is an exchange of promises.<br />???<br />
  3. 3. Step Further – What is a Contract?<br />Contract Defined: a contract is a legally binding agreement between two or more parties which, if it contains the elements of a valid legal agreement, is enforceable by law or by binding arbitration…<br />A contract memorializes what was promised.<br />
  4. 4. HOW DO I KNOW WHETHER I NEED A WRITTEN AGREEMENT?<br />Answer… It depends on the nature of the transaction.<br />Do you lease office space or equipment?<br />Do you buy and sell goods or services?<br />Do you have vendors/suppliers?<br />Do you enter into repetitive sales transactions with the same customers?<br />Do some of your sales require you to manufacture goods<br />Do you have to procure materials ahead of time?<br />Do you enter into biz relationships that are anticipated to last longer than a year<br />Do you work with or sell real property?<br />Have employees or use independent contractors?<br />
  5. 5. Examples of AgreementsUsed in Manufacturing<br /><ul><li>Asset PurchaseBusiness SeparationCollaborationConstructionConsultingEmploymentFranchiseIndemnificationJoint VentureLeaseLicenseLLCLoan
  6. 6. ManagementManufacturing/SupplyMergerNon-CompetitionOffer LetterPartnershipPromissory NoteSalesServicesSeveranceShareholderStock Purchase</li></li></ul><li>Integration into Existing CompanySystems<br />First how would you honestly describe your current company system/personality?<br />Efficient or wasteful<br />Organized or dysfunctional<br />Flexible or rigid<br />Long term or short term focused<br />Continuously improving or stagnant<br />Quality seeking or play the numbers game<br />Communicative environment or hierarchy<br />Title focused or project focused<br />Task focused or goal oriented<br />Informed staff and management<br />Accountable/Ownership of ideas<br />Lean<br />Traditional or Future focused<br />
  7. 7. Integration Cont.<br />Assess your company’s “corporate personality.<br />Think of occasions when your idea, goal/objective, or mutual promises missed the mark and there was disagreement between individuals within the company or between your company and a supplier… or customer regarding a particular course of action, cost, delivery date, etc.<br />Assess , based on your corporate personality, whether the root cause was a miscommunication or disagreement due to failure to recall what the agreement was or a failure to memorialize details.<br />Could this have been avoided with a written agreement, letter, memorandum, contract, form, or strategic planning agreement formed internally?<br />
  8. 8. Example A-How Corporate Personalities Affect Transactions <br />Traditional corporate personality<br />Hand shake<br />Napkin<br />Word is bond<br />Generalized deal making based on familiarity<br />Why this does not always work – <br /> Deals are not adequately communicated to workers w/in the company<br /> Transactions are becoming more complex and require greater detail<br /> Technology and innovation changes biz practices among companies <br /> New players, i.e. international suppliers and customers<br /> Demographics <br /> Population in transit/Worker turnover (Original participants in projects may change)<br />Exercise time<br />
  9. 9. Example B – How Corporate Personalities Affect Transactions<br /> Traditional Corporate Personalities can result in the following: –<br />Misuse of resources, i.e. agreed details regarding material or <br />product specs not reduced to writing for Team to refer to during<br />project. May result in returned items, reproduction of items,<br />additional hours paid to workers, utility costs, increase in warranty <br />claims<br />Late Timing and Delivery – Schedule for procurement, manufacture, <br />and delivery lead times not adequately notated and agreed to among<br />departments<br />Misunderstanding of actual end agreement leads to delays<br />Note – A purchase order is not sufficient at the beginning stage <br />of agreement but an adequate slave to a master contract<br />
  10. 10. Start here: Internal written agreements - (Internal Strategic Plans) can help you in several ways <br />An internal agreement/strategic plan serves as a road map to get you through each project<br />Three R’s: The right resources are devoted to the right project at the right time, on time<br />When the three R’s are followed it will eliminate the costs and delays associated with misappropriated resources, avoid re-work orders, allow workers to focus on current projects<br />Internal strategic plans (ISP’s) promote communication <br />ISP’s get everyone “on the same page.”<br />When everyone is on the same page internally this creates efficiencies within the org that are transferred to distributors, suppliers, and end users<br />
  11. 11. Potential benefits of an ISP<br />It can be negotiated internally via staff meeting where all involved have a chance to give their input based on their role in the project, i.e. orders, purchasing, manufacturing, quality, finance…<br />Expectations become transparent and potential pitfalls are discussed and resolved<br />The plan is written, everyone agrees to it, and the plan is implemented<br />Since everyone’s expectations are transparent and reduced to agreement form, the document is now the project road map, there will be no miscommunication or confusion as to how the project is to be completed<br />Potential delays and costs have already been addressed and resolved prior to implementation<br />
  12. 12. Cont.<br />Organized and efficient internal procedures that are written in agreement form can be projected outward to existing customers, vendors, and end-users<br />How?<br />Timely deliveries due to increased communication and efficient timing planning as a result of written teaming agreements and strategic plans<br />Company savings as a result of leaner procedures within the organization may be reflected in more competitive pricing to customers<br />Leaner procedures as a result of more efficient procedures may allow for increases in budget to allow for more spending for necessary supplies including new machinery and greater leverage for pricing<br />
  13. 13. Why are agreements and/or contracts important to new business, relationships with suppliers, and in satisfying end users<br />New Business – <br />Writing it down itself requires communication that will be a good start to an on-going professional relationship<br />Mutual promises are transparent and can be referred later to resolve issues that develop later<br />Prevents arguments over what the original agreement actually was<br />Who bears what risk is anticipated, discussed, and memorialized for future reference if a problem develops later<br />A misunderstanding due to a failure to provide a “standard” written agreement leaves customer with “a bad taste in their mouths” that will be relayed to other potential customers<br />Suppliers –<br />Written agreements provide your suppliers with your expectations and can be referred to if there is a disagreement concerning the terms<br />Notice can be given regarding the repercussions for inadequate performance and provide for a way out if a new supplier is desired<br />Again, expectations have already been memorialized so there is no room for a misunderstanding later<br />
  14. 14. Why are agreements and/or contracts important to new business, relationships with suppliers, and in satisfying end users cont.<br />Customers /End Users<br />Adequate contracts for on-going services or repeat deliveries and purchases<br /> memorialize customer expectations and prevent miscommunication and is a great business practice respected by customers<br />Understanding between parties promotes future business and future profitability<br />Written agreements signal professionalism and accountability and happy customers may lead to referrals<br />Create records of transactions and history of client base for future marketing efforts <br />
  15. 15. Why are agreements and/or contracts important to new business, relationships with suppliers, and in satisfying end users cont.<br />Lower Costs and Adequate Savings<br />Reduce warranty claims and customer complaints<br />Reduce expenditures on additional processing<br />Prevent paying overtime for re-work and/or trying to meet schedules at the last minute<br />Overburdened workers = poor company morale (Get it right the first time)<br />Repeat Business<br />Good written communication results in better relationships w/customers<br />Reduction in miscommunication leading to animosity<br />Your professionalism will be remembered<br />Referrals from customers who had good experiences<br />E.g. – Lawnmower issue third party<br />
  16. 16. Can agreements really help to avoid bad publicity/bad public relations?<br />Reflection: Having a written agreement is a responsible business practice that can potentially leave employees, business owners, and customers satisfied…<br />If the deal, project, or transaction goes bad due to a failure to communicate and memorialize the understanding reached, no matter how small and insignificant it seems, dissatisfied employees, monetary loss, and disgruntled customers can occur<br />SOME FORMS OF BAD PUBLICITY –<br />Newspapers<br />Blogs<br />Word of mouth<br />Social media forums<br />It is easier than ever to spread the word about a bad experience with a company. Social networking sites allow users to spread the word to thousands of potential customers with one post… Think about it. Traditionally one customer would tell five friends who would tell five friends and so on. Now, one customer could tell 200 friends who can tell 500 friends and so on…<br />GOOD PUBLICITY – can be spread just as fast<br />
  17. 17. Litigation and Bad Debt<br />More litigation results from failure of companies to get the agreement in writing due to an increase in misunderstandings <br />Litigation to collect bad debt can be highly unsuccessful for creditor who has no agreement to fall back on<br />Litigation must often be used to determine what the rights of the parties are because it was not memorialized<br />Litigation to enforce implied contracts can take longer and require more discovery<br />Gives your attorney less to “stand on” when arguing your case and makes their jobs harder and your bill higher<br />If you have executed a clear written agreement it is more likely that if you do end up in litigation you will prevail<br />