How to Build an Effective Contract Negotiation Strategy
As a business owner, you’re constantly negotiating with customers, suppliers, and other parties. While some of these negotiations are brief and uneventful, others require careful preparation and detailed negotiation strategies. And knowing how to prepare for complex negotiations can make all the difference for the outcome.
In this article, we’ll try to help you get better results during contract negotiations by providing five fundamental tips.
1. Outline Your Goals and Priorities
Before you begin a negotiation, take time to consider your business’ short-term and long-term goals. Think about what you want to take away from a contract negotiation: is it a better deal, a new business relationship, or something else?
While you might have numerous objectives, they’re probably not all equally important for your business. Ask yourself:
- What outcomes do you want to achieve, and how important are they?
- Which issues are non-negotiable?
- Do the parties have equal negotiating power or is there an imbalance?
Based on your business’ unique circumstances, try and flesh out a list of goals and priorities, noting where you’re willing to make concessions and where you can’t budge.
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Remember that while your immediate goal might be making as much profit as possible on a deal, the long-term value of a strong business relationship can outweigh a short-term compromise in profits. An experienced business lawyer can help you weigh all these factors and build a comprehensive contract negotiation plan.
2. Look for Points of Agreement
Efficiency is key to effective contract negotiations. At the beginning of a negotiation, you should quickly outline all the terms and conditions that both sides already agree on. This practice offers several benefits: it helps you create the basic structure of your contract, acknowledges your mutual interest in a successful negotiation, and lets you focus your energy on resolving any disagreements.
Remember that a good contract negotiation doesn’t have to be a combative process for either side. Unless the other party is completely unwilling to compromise, look at a contract negotiation as a collaborative, problem-solving exercise rather than a battle.
3. Use Facts and Data to Support Your Position
While contract negotiations can occasionally get emotional, you should never base your business decisions on feelings alone. During a contract negotiation, you should outline the facts that support your position, including:
- Industry standards and best practices
- Actual costs per unit
- Your business’s unique value proposition
- Competitive research about alternate products or services and their pricing
This information can become incredibly helpful during negotiations and will help you address any arguments and tactics from the other side.
4. Be Willing to Walk Away From a Deal
Not every negotiation will go the way you hope. Throughout the negotiation process, look for red flags that suggest you should walk away from a deal. These red flags might include violations of laws or business ethics as well as disregard for other business partners. If you don’t trust the other party, it’s typically in your best interest to walk away.
While this sounds easy in the abstract, it can be hard to do in practice. When you’re in the midst of a negotiation, you might find yourself caught up in the pressure to make a deal. If you’re uncomfortable with the pace or tone of a negotiation, take a break and consult an experienced business lawyer for help.
5. Get Help From a West Michigan Business Lawyer
It’s always in your best interest to work with an experienced business lawyer during a contract negotiation. A poorly negotiated or badly drafted contract can result in regret and additional headaches, including litigation. When you hire Phillips & Santana, our primary goal is to protect your business’ stability and reputation.
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We help our clients:
- Draft, review, and interpret contract documents
- Structure non-competition, confidentiality, and arbitration clauses
- Assess the financial and legal implications of a contract or a breach of contract
- Enforce existing contracts and demand compensation for breaches
At Phillips & Santana, we provide affordable, efficient representation and handle a wide variety of business law and contract issues. For more information about our business law practice, contact us today.
Law Offices of Kari Santana: Trusted Advocates for West Michigan Business Owners
The team at the Law Offices of Kari Santana assists West Michigan business owners at every stage of business development. Whether you’re negotiating your first contract or you’re looking to build a business succession plan, we’re here to help. To get in touch with us and schedule your free, no-risk initial consultation, fill out our online contact form or call us at 616-717-5759.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.