05 - Costly Contract Mistakes Entrepreneurs Make and How to Avoid Them
The Real Cost of Avoiding Contracts
As a business owner I can admit that navigating business contracts can feel daunting and complicated. As a lawyer, I know all too well the law is not designed to be understood by everyone. That’s why it’s no surprise that many business owners find it appealing to avoid contracts.
If you’ve ever skipped a contract to keep things “simple,” you’re not alone. As a lawyer working with women entrepreneurs every day, I see it all the time: trust-based agreements, copy-pasted contracts, or worse, no agreements at all.
But here’s the truth: what seems like the easy way can end up being the expensive way.
In this post, I’m breaking down three real contract mistakes by entrepreneurs I recently met. Read through the stories below to learn what contract mistakes to avoid if you want to protect your business, your money, and your peace of mind.
1. No Lease Agreement for a Retail Business
A retail business was operating in a rented storefront, with only a verbal promise of a one-year lease and no written agreement.
Three years passed without issue, until February 2025, when a leak appeared in the unit. An investigation revealed a structural problem coming from the space above. The business owner reported it to the landlord, but they refused to take responsibility.
The leak worsened, severely disrupting operations. With no lease in place and no legal leverage, the business owner had no choice but to abandon the location and relocate. The cost? Thousands of dollars in relocation expenses, disrupted operations, and lost sales.
Why This Happens:
Entrepreneurs, often tempted to rely on verbal agreements with landlords to avoid delays when looking to rent a commercial space. The biggest concern is often rent rates and once these are settled on, the rest just seem like details they don’t want to bother with.
The Solution:
Always sign a written commercial lease that outlines key terms: rental period, notice requirements, rent increases, and exit options. If you're currently renting without one, get something in writing as soon as possible. A good commercial lease agreement sets clear terms between a landlord and tenant, protecting your right to use a space and defining responsibilities on both sides.
2. No Guest Release for a Podcast
A podcast host recorded an incredible interview and released the episode, only to have the guest request its removal days later.
The podcast was gaining traction and building a loyal audience, and this episode had been especially well received. But without a signed podcast guest release, the host had no legal foundation to retain the content or explain his rights to use it.
Unsure of how to respond, he ultimately took the episode down, losing hours of preparation, editing, and momentum. Frustrated but determined to protect future work, he reached out for legal support.
Why This Happens:
Content creators often overlook legal protections when they’re moving fast or working with people they trust. In this podcaster’s mind he had all he needed once guests agreed in writing to be interviewed for his podcast.
The Solution:
Use a podcast guest release agreement that covers rights to record, publish, promote, and repurpose content. It protects both your creative work and your platform’s credibility.
3. No Terms and Conditions for a Membership Community
An entrepreneur was five years into growing a thriving paid membership community. What began as a small group had grown to dozens of engaged members, but there were no custom terms and conditions in place.
They had generic terms copied from the hosting platform’s website, a company based in another country. Unfortunately, those terms didn’t actually apply to or protect the community.
The gap became painfully clear when a member “borrowed” a large portion of the content to launch a competing program.
The result? Lost trust, no enforceable boundaries, and serious intellectual property risk.
Why This Happens:
Many entrepreneurs don’t realize that terms & conditions are essential for online offers, programs, and communities. It’s a terrible mistake to assume that just because you’re using an established platform, the terms and conditions of that platform will protect their business.
The Solution:
Create custom terms and conditions for your digital products, memberships, or courses. These should clearly outline payment terms, content use, community guidelines, and refund policies.
Why Contracts Matter for Small Business Owners
Whether you’re launching a podcast, opening a storefront, or building a membership community, contracts aren’t optional, they’re essential.
Here’s why:
They show you’re serious about your business
They signal respect for your clients, your collaborators, and your work
They reduce confusion and set clear expectations
They protect your time, money, and intellectual property
Most importantly, contracts empower you to run your business with clarity and confidence.
Don’t Let the Fear of Legalese Hold You Back
At Encino Law, I help women entrepreneurs create contracts that are simple, smart, and tailored to real business needs, no jargon, no judgment, just support that fits your values and your vision.
Your work deserves to be protected. Let’s make sure your contracts are doing their job.
