SMB Contract Management Statistics & What They Mean

As a business grows, contract management isn’t always top of mind…

But it should be. 

According to the Journal of Contract Management, three out of four companies can’t find 10% or more of their contracts. That means they could be violating contract terms without realizing it, missing contract renewals and terminations, and overlooking payment milestones. 

How does this impact a small business? That’s what we set out to discover. 

Keep reading for key SMB contract management statistics and how they impact your business.

SMB Contract Management Statistics

Contract management statistics infographic

The Cost of Poor Contract Management

Contracts fuel your business and impact every area of operations. But only if you’ve got a good contract management process.

Otherwise, you’re likely letting things fall through the cracks.

No shame. Most small businesses go through this phase as they optimize their operations. The trouble is, many don’t realize the stakes of having a poor contract management process in place.

Here’s what contract management statistics tell us:

Most SMBs prefer a DIY approach to contract management 

Most small businesses (84%) manage their contracts without input from an attorney, according to Delino’s 2022 small business survey, Risk vs. Reward, Instead, they try to identify and respond to bad contract terms on their own.

The result? Nearly half (48%) of small businesses experience contract risk, according to Forrester.

Because small businesses tend to be comfortable with risk, this may not seem like a problem. But our findings suggest otherwise.

Contract risks are real

First, contract management — good or bad — costs time and money.

You may have a legal background and be adept at isolating high-risk clauses in your contracts, but the time it takes to review contracts still costs money. That’s time you could have spent growing and operating your business.

In most cases, though, small businesses aren’t legal experts. They agree to terms that raise their risk levels because they don’t have time to decipher the legalese so to fully understand the risks they’re accepting.

Even if you do identify risky clauses, you may not be comfortable redlining it and negotiating better terms. What if your amendments add risk rather than mitigating it? What if it blows the deal?

As mentioned above, poor contract management adds to your risks:

  • You can lose contracts because they weren’t renewed on time.
  • You can unintentionally stay in unwanted contracts because you missed the auto-renew date.
  • You can’t adequately defend yourself against contract disputes because you don’t know where you saved the contract.
  • You lose the opportunity to increase your pricing because you missed the pricing notification obligation requirement.

The bad news: These issues can cost 9% of your annual revenue, according to WorldCC

The good news: All of these issues are preventable with simple improvement to your contract management process.

The solution: a smart contract management process

The success rate for small businesses is abysmal. No one wants to be part of these statistics:

  • 20% of SMBs will fail in their first year.
  • 50% won’t make it beyond Year 5.

The secret is to strategically manage your risks. Starting now.

The truth is, running a business is risky. But to outlast the statistics, you’ve got to balance risks with opportunities. And an easy way to do that is by managing your contract risks.

The Value of AI in Contract Management

Contract automation is the new frontier for top-performing businesses. Not only does it save time, it improves contract workflows, because contracts are processed more efficiently. 

No more lost revenue because you didn’t get that contract signed soon enough or can’t remember where you saved it. No more worries about breach of contract because you can’t remember the terms of your agreement.

The challenge is finding an elegant solution designed for SMBs. 

Enter Delino.

Delino is a smart contract review solution developed specifically for small businesses. It offers:

  • Better contract review
  • Identification of high-risk terms
  • Suggestions for how to redline those terms
  • Centralized repository for your contracts
  • Automatic notification of your obligations

When you’re dealing with big businesses, you’re at a significant disadvantage. They have a team of lawyers protecting their interests — while you’re trying to do it yourself.

Delino gives you the insights you need to be able to cut through the legalese, improve your contract terms, and manage your overall risk profile. So you can ink better deals and focus on growth.

Best of all, it leverages AI, so you’re on the cutting edge of contract management trends for small businesses.

Want to take it for a test run? Apply for the Beta. Currently, we’re accepting established solopreneurs and SMB agencies, consultants, and technology companies.

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DISCLAIMER: Delino is not a lawyer and makes no warranties that its advice will protect your business from lawsuits or damages. Users rely on contract feedback at their own risk. Please consult your attorney for legal advice.