Your business terms and conditions: too strict, too easy or … just right?

Most businesses have difficulty finding the balance between their business terms and conditions and attracting clients. Some have rigid policies that are very strict; and these can scare off clients. Other easier, more lenient terms and policies may mean your business could cause you to lose the shirt off your back.

To show you what I mean, I have three case studies. Do any of these business examples strike a chord with you?

The case of Strict Stan

Stan has an online toy rental business. He is worried about everything from loss and damage to liability for kids being injured by the toys. He has very prescriptive rules for his customers on how to use the toys and very long indemnity and disclaimer clauses. He’s having a lot of trouble getting his business off the ground as customers are worried about the number and rigidity of his rules, how strict he is about damage, not being able to take the toys off the premises and how to use the toys.

Advice: You may find that by giving too many rules on how to use your products or by stating complex terms for providing your services, potential customers may be scared off buying from you or engaging your services.

In addition, if you have very specific terms of use for your products, you may be overriding or otherwise contradicting your standard manufacturer terms. If you provide, for example, age or use requirements different to the manufacturer, they may not be required to honour their manufacturer guarantees or warranties and you may end up with more liability than you expected.

The case of Easy Eddie:

Eddie had a battery business and wanted to offer his customers peace of mind that their batteries would be fully refundable and long lasting. So he offered a 365 day money back or exchange guarantee! Customers took advantage of this and ended up using the batteries for the year and exchanging the used batteries for new ones at the end of the year. It was costing Easy Eddie more in replacement and shipping costs than the order was worth and going to put him out of business.

Advice: On the one hand, you can provide generous refunds and warranties that you would like to be offered yourself (if you were a customer). And, more often than not, this is important and fundamental in convincing a customer to purchase.

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But then you may find some customers take advantage of this, requesting refunds for goods they are planning to keep or services they are otherwise happy to receive. Your generous return, exchange or refund policy may wind up costing you more than the goods themselves are worth.

The case of Just Right Jim

Jim has an organic readymade meal delivery service. He offers a free trial service so he can have a ‘no refund’ policy. He delivers to your door but requires you to be home to ensure the food is kept fresh at set temperature. You can cancel anytime and pick from a menu. His business is growing faster than he is able to manage!

How to get your policies just right

You need to be careful and try hard to find a balance between attracting customers with your fair and reasonable policies and, at the same time, protecting your business. Here are the two main areas you should cover off in your business terms and conditions:

1. Professional Legal Terms

These are to ensure your business is protected. As a business owner you may not realise you have legal business requirements and protections. These include consumer terms, liability and other similar legal protections, all of which should be written by a lawyer.

2. Commercial Terms

The terms for the commercial side of your business are important, both to attract customers and to ensure you can manage your business model. Review your return, refund, and delivery policies for example. Look around at other competitor’s policies on these and see if you want to align your policies with theirs. Consider your business model, what you are selling and see if they are suited to offering a return policy at all. And make sure you can manage the workload that may arise from the promises you may be making.

Your business terms and conditions can wreak havoc with your business protection and you have to be careful not to ‘give up the baby with the bathwater’. Your terms are the main protection for your business as well as attracting customer confidence. You can be friendly and offer good delivery, return and refund terms without compromising your business protections.

You just need to ensure your business terms and conditions are not too loose, not too strict but just commercially sound.

Which one are you?