Many of you have already mentioned some of these ideas but I wanted to include them anyway.
Once a prospect is ready to become a customer based on the information you have conveyed, the two of you have laid the groundwork for an agreement. Such agreements should always be committed to paper. Perhaps there was a time when a handshake was enough and there may well be people with whom that would be adequate but it is much too risky when you are investing funds for materials and many hours of your valuable time. For that kind of arrangement a written contract is essential and it protects both parties should issues or differences arise.
Policy 2 – Before facing your first customer you should have a standard and brief contract form to be signed by you and the customer before the work begins. The contract should describe the work in detail, list the total price for the work, and set a specific date of completion. There are three additional parts that should be included with the contract. The first two of these are important and the third is critical to your financial success. The first one is a set of simple specifications describing the materials to be used and any other basic information that should be understood by both parties. The second one is a scale drawing of the project with several views so the customer has no doubt as to what he or she is buying from you. The third item is so important that I have listed it below as another firm policy.
Policy 3 – Require a deposit equal to 50% of the contract price to be paid upon execution of the contract for the specified work.
This is where some woodworkers balk and tell me their customers would never consider paying a 50% deposit before they even begin the job. I can’t speak for other woodworkers but after hundreds of jobs over more than 20 years, only three customers ever balked about the deposit. I refused to do all of the jobs. One of these customers returned to my shop deposit in hand the next day. Another one mailed me a check a week later. Both of these signed the contract later and I did their work. The third absolutely refused even though I had completed a beautiful job for their next door neighbor who had recommended me to them. That job I lost. In these calculations I am not counting General Contractors. I don’t count them because almost all of them want you to do the job and wait for payment until they get their draw from the bank. My policy pretty much left contractors to someone else and that was fine with me.
-- Bill, Austin, Texas, http://woodworking-business.com