Performance bonds are very versatile and handy things to have if you own your own business. However, there are some businesses that don’t need it as much as others. Then there are businesses that had better not be without it. Which one is yours? Well, let’s take a look.
First, it is instructive to understand how a performance bond works. Contractor bonds or performance bonds are issued by surety bond companies so that you can be covered against incomplete work or damage to property or the work in the process of doing the work. If that happens, the surety bond company comes in and either pays the client or hires another contractor to finish the work. So does your business need this? Here are two ways you can know.
First, if you regularly take deposits to finish work, which then pays the other half. If you sign a contract and then work in someone’s home or office, this is a perfect example of a business needing a contractor bond. If you find yourself here, and don’t have a bond on file, you should stop reading this right now, and go and find a good surety bond company and get a contractor bond.
Second, if you regularly put out bids to commercial entities. These companies look much more favorably on contractors that are bonded. In fact, there are many who won’t even take a bid from a company that does not have a bond on file.