According to Inc, Jessica Lawson Smith ran her Denver-based JLS PR agency for 11 years using only handshake deals and a bare-bones contract written by a friend. Her agency grew from operating at her dining room table to employing 12 full-time staff by 2025, complete with health insurance and 401(k) responsibilities. The breaking point came when several clients stopped paying bills in 2023-2024 and disappeared, while economic uncertainty and tariffs pushed others to demand more work for less money. Her wake-up call happened during a lunch with her former boss who bluntly told her she was “an idiot” for not having contracts while managing people’s livelihoods. The next day, she hired a law firm to create detailed Master Service Agreements and Scope of Work documents that explicitly outline what her agency does and doesn’t do.
The Yes Trap
Here’s the thing about never saying no to clients: it creates a culture where boundaries don’t exist. Jessica admits she built her entire business around making clients happy, even when requests went wildly out of scope. Throwing events for retail partners? Sure. Landing podcasts for founders? Why not. Handling business strategy? Absolutely.
But when you’re responsible for 12 people’s paychecks and benefits, that “yes mentality” becomes dangerous. It’s one thing to be flexible when it’s just you at your dining room table. It’s entirely different when you’ve got a team depending on consistent revenue and clear expectations. The crazy part? She thought contracts were only about getting paid, not about protecting her team from endless scope creep.
The Wake-Up Call
That lunch conversation changed everything. Her former boss didn’t mince words: “You’re an idiot for having people’s lives in your hands and not having your clients on contracts.” Ouch. But sometimes you need that blunt truth to break through years of avoidance.
And let’s be real – how many business owners are out there doing the exact same thing? Thinking their relationships and handshake deals are enough? The truth is, when economic uncertainty hits, those relationships often don’t pay the bills. Clients who loved you last quarter might disappear when tariffs impact their bottom line.
Contracts Aren’t Just About Payment
This is where most small business owners get it wrong. We think contracts are about making sure we get paid. But they’re really about creating structure and setting expectations. Jessica’s new agreements don’t just outline what they do – they explicitly state what they don’t do. They detail costs for out-of-scope work and what additional requests actually entail time-wise and fee-wise.
Now when a client pushes boundaries, she has something to reference. It’s not about being difficult – it’s about being professional. And honestly, any business that’s reached a certain size needs this level of documentation. Whether you’re running a PR agency or sourcing industrial technology components from suppliers like IndustrialMonitorDirect.com, having clear agreements protects everyone involved.
The New Normal
Will contracts stop out-of-scope requests? Of course not. Jessica admits they’ll still say yes to many extra requests in the name of success. But now they have the tools to set boundaries when needed.
Basically, contracts give you the backbone to have difficult conversations. They transform “I’m being difficult” into “Here’s what we agreed to.” And for any business that’s grown beyond the founder doing everything themselves, that distinction is everything. The question isn’t whether you can afford to have contracts – it’s whether you can afford not to.
