Strong contracts can give you a marketplace edge over the competition. They can allow you to secure supplies at an affordable costs, lock in sales and clientele at desired prices, and ensure that you have the space and talent necessary to advance your business interests.
But proper contracts don’t fall off trees. You have to work hard to secure them, which leaves some business owners worried. Some owners don’t have confidence in their negotiation skills, while others may not even know what goes into an effective contract.
If you’re in either boat, don’t worry. In the remainder of this post, we want to discuss some contract negotiation strategies so that you know how you can position yourself to obtain the most favorable terms possible under your circumstances.
Key contract negotiation strategies
There are several different ways to negotiate your contract. You have to find the strategy that works best for you and your business under the circumstances. With that in mind, here are some strategies to consider implementing when you start the contract negotiation process:
- Know the alternative: Before starting the negotiation process, you should know what your best course of action is if negotiations fail. This will help you set parameters around the negotiations so that you know when you can and should push for better terms, and when you should consider walking away from negotiations altogether.
- Build trust with the other side: You’re much more likely to secure the contractual terms that you want if the other side likes and trusts you. Therefore, building rapport with the other party can be critical. To do so, ask meaningful questions about their business so that you demonstrate genuine interest in what they do. Figure out what it is that they hope to get out of the contract negotiation process so that you can try to find ways to help them out while also protecting your interests. Your intentionality here can go a long way.
- Be articulate: When you deny an offer or make a counteroffer, you should be able to articulate your justifications for asking for what you’re proposing. If you’re inarticulate, then the other side might struggle to understand your motivations, which can stall negotiation progress and render it more challenging to secure the outcome that you want.
- Understand root causes of hesitation: If the other side is hesitant to accept your terms, or they simply object to them, don’t get angry and throw harsh words back at them. Instead, ask targeted questions to obtain clarification and show empathy. This will buy you some goodwill with the other side and help you understand how you can approach the problem that generates positive results for both parties.
- Keep the long-term in mind: While you might need to close your deal to provide short-term relief to your supply chain or your revenue streams, you also need to keep your long-term goals in mind. If you hope to generate a long-term working relationship with a supplier, for example, then you may want to be more accommodating on the front end to help establish that relationship.
Do you need help dealing with your contractual issues?
Negotiating contracts in a fair and favorable way can be challenging, but it isn’t impossible. And you shouldn’t let the frustrations of the process lead to harsh words and terms that are impossible for the other side to meet. This will only hurt your business.
So, be sure to develop the contract negotiation strategy that’s best for you and your business so that you maximize your chances of obtaining the outcome you want.