The “fine print” is one of the most typical business anxieties. Huge amounts of money may be spent to employ the proper individuals to use the right phrases to exploit an unknowing negotiator—and it frequently goes unreported until he or she writes the dotted line.
But it doesn’t imply you have to be sceptical of everyone you meet while you’re negotiating a contract. It just indicates that you must exercise caution. When you don’t take contract negotiations seriously, it might have a detrimental impact on your organisation.
In fact, inadequate contract negotiation is one of the most common hazards for small company owners and entrepreneurs when it comes to getting a firm off the ground. A lousy contract may sink a toy boat faster than a cannonball, whether it’s due to malice, inexperience, or just a lack of attention.
Every contract will be unique, but negotiating does not have to be. Here are five methods you may apply every time you negotiate a reasonable contract that protects your — and your colleague negotiator’s — best interests.
Take the Lead
If you really want to maximise your chances of success, you must be proactive about your contracts even before the negotiating process starts. Begin by proposing to write the contract: It’s a practical technique to guarantee that you’re well-versed in its language, and it’ll make you more aware of possible dangers and blunders.
It’s not simply for your personal benefit that you’re drafting the first contract. It’s advantageous to both you and your negotiation. You’re proposing to lessen their burden while also demonstrating your seriousness about gaining their business.
However, be certain that you do not merely make the offer and then run with whichever things you believe are most crucial for the deal. That will very certainly put a customer off to your company or vice versa.
Consider enterprises like this New York-based publishing company, which attempted to design contracts that primarily protected its own interests. The corporation took advantage of its unwary customers by using devious verbiage laced with legalese—and it earned them an internet-wide blasting that was ultimately more destructive in the long run.
Avoid using this terminology in your contracts, and you’ll prevent your company from a bad image. Instead, before starting to design a contract, send an email that highlights the areas that are crucial to both sides.
Understand the needs and desires of the other party.
Even after both parties have addressed the things they believe are crucial for the contract, it is your responsibility to fully comprehend the other party’s genuine requirements. You’ll encounter a lot of unneeded barriers and changes if you attempt to bargain outside of their means.
Do some preliminary research about your customer before beginning to construct the original contract, and you’ll have a lot simpler time negotiating.
Some fundamental items to investigate include the other party’s financial limits—spending habits, company expenses, and so on—as well as its core business strategy. Obviously, negotiating to fulfil an order of paper products for a youth centre would appear quite different from negotiating to complete an order for a corporate office. If you desire each client’s business, your contracts must be tailored to their specific means and wants.
If you’re looking to secure items for your own organisation, the same criteria applies. When negotiating for a company’s services, you must walk a fine line between asking too much and allowing them too much leeway. You can’t expect a mom-and-pop hardware shop to produce at the same level as Home Depot, but it doesn’t mean they get to run the clock.
Simply said, don’t go over your limits. The last thing you want to do when crafting a negotiation is scare the other party away from doing business with you.
Being impatient is a typical error made by new company owners and entrepreneurs. While there is nothing wrong with being persistent in your pursuit of a client’s company or services, it is critical to be confident in your offer. After you make an offer, some may take longer than others to respond with a counter offer… it’s OK to wait.
People often misinterpret quiet as a lack of interest, and as a result, they back down from their first offer and go lower. Don’t do it. Never bargain with yourself. Allow your customers to make a counter-offer rather than just delivering them a lesser figure.
If the other party does not respond, just send another follow-up email, since they are most likely just reviewing your offer carefully. Don’t let your impatience be misinterpreted as desperation, which will cost you money.
Value-added propositions should be made.
If you want to be successful in your negotiations, make sure that all of the ideas in your contract draughts give value to the benefiting party. Nobody wants to pay for a service that they could execute themselves, just as you don’t want to bargain outside of your or your client’s means.
Keep in mind what you or your customer can already do and leave them out of the discussion.
All of the services provided in your contract should be useful beyond a client’s present capabilities. Similarly, your services should have the least amount of influence on a client’s internal resources as feasible. For example, if a prospective customer already has a warehouse accessible, it’s unlikely that the contract would contain a provision for extra storage.
Have a Competitive Advantage
When attempting to get the “upper hand” in a contract negotiation, you are not merely attempting to outperform the other party: you are attempting to earn their business. You may be honest, aggressive, patient, and useful, but you won’t receive the terms you want if your offer or services aren’t as excellent as anybody else’s.
You don’t want your negotiation to send the sense that you’re just attempting to save the customer money. Make it clear to your customers why they cannot afford to refuse your offer. You don’t have to sell yourself short, but if you’re asking for a greater value or better rates, the customer wants to know that they’re receiving the greatest service or the most dependable firm available.
Obviously, you should combine these suggestions with a qualified lawyer’s eye when drafting your final contract, since a legal blunder might lead to significant damages.
If you use these five methods in your next contract negotiation, you may save yourself a lot of grief. But, in order to be a long-term company success, you must deliver on what you promise. Contract negotiation will no longer be a cause of worry if you really believe in your company and do your best to satisfy the demands of the other party. Instead, it will become a platform to truly expand your company.