Five Tips for Negotiating a Business Contract
As a business owner, it is vital that you master the art of contract negotiation. After all, your ability to make the best deals for your organization will play a huge role in its ongoing success.
If you wish to improve your chances of success the next time you have a big deal that requires negotiations, the following tips may prove helpful:
The most effective way to control a contract negotiation is to research the other side. If you know your counterpart is in a hurry or desperate for a deal, you can get concessions.
You could also choose the location or set the agenda by managing the timing of the talks.
A passive approach can be effective, too. Rather than setting the rules, act as moderator by writing summaries of where things stand. It’s a clever way to add a spin that serves your interests.
Emphasize that you’re looking for standard industry terms. Referencing what others have received increases the likelihood you’ll get a fair shake because it shifts the burden to your negotiating partner.
If they don’t think you should be treated like the others, they’ll have to explain why or offer you something of value as compensation.
Never begin with your bottom line. When you make an offer, leave yourself enough space to make concessions.
Grant your counterpart a request, and they’ll feel they’ve won a battle. This will put them in a better position to return the favor, especially if they answer to someone else.
Break It Up
When one side takes an all-or-nothing approach, negotiations can break down. Bypass that by breaking contracts into smaller pieces. Seek agreement on each article, and before you know it, you’ll have a complete understanding.
This step-by-step approach results in more durable deals since parties reached consensus on every little detail.
Find the Silver Lining
Negotiations are about more than dollars and cents. They’re also about relationships. When your counterpart is right about something, let them know. This establishes a friendly, collaborative tone that should lead to progress and a resolution that suits both sides.
If negotiations are spread over multiple meetings, try closing each on a positive note.
Whether you run a small local company or a large multinational corporation, your ability to negotiate contracts is often the difference between the success and failure of your organization. By following the tips outlined in this article, you can maximize your chances of success during your next negotiation.
Schooley Mitchell has negotiated vendor pricing for over 20,000 businesses across North America.