Running a start-up or small business doesn’t mean you need to settle for inferior contracts and terms. As a small business, it’s important you develop the skills to negotiate all the partnerships and deals you enter into. In this article, we look at how you can get the best out of contract negotiations, here goes!
Understand Your Needs and Prioritise
Before you even begin the process of negotiations it’s important to understand clearly what your short-term and long-term objectives are. Be sure to have clarity as to what is absolutely non-negotiable and what can be compromised. Doing this will ensure you end up with a deal that you are happy with and that meets your objectives.
Research Thoroughly
Prior to any discussions, it’s important to research the other business involved. Understand the industry norms and typical contract terms for their sector.
The size and financial standing of the company in the sector can have an effect on how you approach negotiations. Understanding your own market value can also help negotiate terms that are not only fair but also competitive.
Build and Leverage Relationships
Building rapport and a positive relationship with the other party can ensure a smooth and quick negotiation process. Try to be as transparent as possible about your expectations and most importantly listen to any concerns they may have.
A good working relationship will build trust making it more likely to find common ground to reach a mutually beneficial agreement.
Be Clear and Concise
Be sure to be as clear as possible in your communications. Any ambiguous language can lead to misunderstandings and disputes further along the line.
Ensure all parties fully understand the content of the contract to avoid any potential conflicts later on.
Seek Legal Guidance
It’s important that you fully understand the legal ramifications of your negotiations. Any lawyer specialising in commercial contracts can help you navigate the legal complexities.
Legal advice will ensure the terms of the contract are in your best interests and free of potential risks.
While legal help may require some costs, the money saved from costly mistakes is an investment that is invaluable.
Negotiate Incrementally
Aim to break down negotiations into manageable parts. Address specific parts of the contract one clause at a time to make the process less overwhelming.
This incremental approach allows for a more focused negotiation and increases the likelihood of reaching an agreement on terms.
Be Prepared to Compromise
Flexibility in negotiations is essential. Try not to see negotiations as an opportunity to extract as much benefit for your company and little for the other party. Such behaviour may result in blowing the deal entirely.
Try and identify areas that can be compromised on without losing sight of your core objectives.
A collaborative atmosphere increases the chance of reaching a satisfactory agreement.
Set Deadlines and Milestones
The longer any negotiations take to finalise the less likely the deal will progress successfully.
Ensure you establish clear timelines and deal with any concerns or questions promptly to avoid unnecessary delays.
Having a clear timeline creates a sense of urgency and drives all parties to participate in an efficient manner.
Include Exit Strategies
Think carefully about strategies for exiting the contract should things not work out as planned.
By including well-defined exit strategies and termination clauses in your contract you protect both parties in case of underperformance or unexpected challenges.
Document Everything
Ensure you document every part of the negotiation process. Keep all communications, agreements and changes.
Aim to keep all contract negotiations in writing. Any non-written verbal agreements may cause issues later if not codified in the contract document.
Having a comprehensive record of negotiations can protect your interests and aid resolution in case of disagreements.
Final thoughts
Honing your skills in contract negotiation can have a huge impact on the success of your business.
Try to see negotiation as an opportunity to build positive business relationships rather than getting one over on the other party.
Remember, each negotiation is an opportunity for growth and collaboration.
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