Last Updated: June 19, 2020
Negotiations can make or break a small business. They are a vital part of a well-oiled machine that keeps your company going. Making the best of a contract is crucial, especially during tough economic times. Do not fret! Get started on the right path by refining your negotiation skills.
Do not walk in empty-handed or unprepared. Familiarize yourself with the best contract negotiation tactics.
Preparation, Preparation, Preparation!
Have you heard the saying “preparation is key”? Preparation is a critical business negotiation strategy. You need to figure out who you are working with while creating a business relationship. Research the individual or company you are meeting with. Get familiar with their vibe and presence. Dig up the other party’s history and reputation with other business associates.
Another important element of preparation is knowing before you walk in what you are asking for. Create a goal while considering your budget. Know going into the meeting what your bottom line is. This will help you prepare to ask the right questions, such as:
- What is the timeline for this deal?
- How does our proposal benefit you?
- Is this the best offer you can extend
- Who are your competitors?
Plan ahead when it comes to your negotiation strategies. Know your audience and review your proposal. Draft the contract before the meeting. Be sure the proposed agreement is fair and reasonable. Coming into negotiations with unreasonable expectations sets you up for failure. Make sure your proposed business agreement includes the important elements of a contract. Typical contract negotiations take a number of back-and-forth’s for the parties to finally reach an agreement.
Time is precious, so when it is time to sit down at the negotiation table, be sure you are dealing with a person that has the authority to make business decisions. If you want to learn more about preparing for important business meetings, Indeed broke down some tips on business preparation.
Confidence is Important
While negotiating, observe the other party’s body language. Are they slouching? Do they seem nervous? It is important to notice their body language because they are also judging yours. This is why confidence is absolutely critical during the negotiation process. Do not concede with everything the other party is saying, because that is not much of a negotiation at all. Identify who has the bargaining power and adjust accordingly.
With that being said, try not to be “overly confident.” If the negotiation is not going as planned, stay professional. They may be observing how you react. Keep your emotions in line, and remain cool and collected. Negotiations are not always successful, but that could be for a variety of reasons outside of your negotiation skills. Knowing the risk, still, walk in the room with the mindset that a deal will be made.
Throughout the negotiation, discover your leverage. Dial-in on your strength, especially if you can offer a particular product or niche that is hard to find. Knowing how to use your leverage can steer the negotiations in your favor. Entrepreneur broke down 9 ways to show more confidence, which could be a good read if you feel like you’re lacking here.
Share the Floor
You do not want to be the negotiator who does all of the talking. That can come across as abrasive and give off the impression you are unwilling to work with them. That turns into a one-sided issue, which is the opposite of a productive negotiation. The best negotiators take a collaborative approach. Teamwork makes the dream work!
Actually listen to the other party’s point of view and evaluate their concerns. This is what triggers your problem-solving skills. Actively listening allows you to evaluate the tone of the meeting. While listening to the other party, really think about what they are saying and formulate an effective response. Listening provides a better understanding of what the other party’s goals are and how much they are willing to negotiate. Opening the door to communication strengthens the business relationship and increases the chances of a successful negotiation.
Put on Your Poker Face
Business agreement negotiations are a game of give and take. The parties go back and forth until they reach agreeable terms. However, sometimes, depending on the circumstances, the parties are unable to come to a deal. You have to stand firm in your offer and know when to walk away. Walking away is a hard pill to swallow, but it may actually work in your favor.
Think of it like this… you are shopping for a new car. The dealership will try and sell the car for top dollar, but you are looking for the best deal. You go back and forth to see if a deal can be made. If the price is too high, you may decide to walk away. This usually triggers the salesman to work even harder to gain a commission and may reach back out to you to offer you a better deal. This is not always the case, but it is a useful negotiation strategy. For more on this strategy, read how good leaders can keep their emotions in check, and thus keep a better poker face.
Time of the Essence
You are busy building your small business into a successful money-making machine. You do not have time to waste on negotiations that are not going anywhere. Using strategic psychology will clue you in on a deal that is deadlocked.
Understanding the dynamics of negotiation can help you best manage your time. One tip is to avoid getting distracted on minor issues that, in the long run, do not really matter. Taking up too much time can derail a potentially viable deal. Draft a term sheet or letter of intent. This shows you have put in a genuine effort and that you are serious about working together.
Time management is essential, but be careful not to rush. This includes hasty decisions like accepting the first offer. This is a very common and usually detrimental mistake. Reviewing counteroffers and going back and forth will increase the likelihood of reaching an agreement.
ApproveMe Offers 100+ Contract Templates
At the end of the day, getting to yes is the ultimate goal. Moreover, the parties should feel satisfied with the terms they agreed to. This will ensure a good relationship between the parties. ApproveMe has 100+ contract templates available at your fingertips. Drafting a contract before negotiations help expedite the process so the parties can work to reach a deal.
ApproveMe changes the way you get contracts signed. After you have successfully negotiated a deal, ApproveMe’s E-signature WP plugin is your next solution. It is quick, easy, and convenient, and best of all, it is legally binding.
NEXT ARTICLE >> Signing Contracts Online
This Article is Part of ApproveMe’s Contract Guide for Beginners:
Sec 1: Contracts 101: Contracts Intro
Sec 2: Contract Definition & Importance
Sec 3: Are Agreements & Contracts Different?
Sec 4: The Elements of a Contract
Sec 5: Contract Terminology & Glossary
Sec 6: Free Contract Template Insights
Sec 7: How to Draft a Contract
Sec 8: Is Your Contract Enforceable?
Sec 9: Contract Review Checklist
Sec 10: Contract Negotiation Tips
Sec 11: Signing Contracts Online
Sec 12: How to Read a Contract
Sec 13: Contract Amendments
Sec 14: Contract Termination
Sec 15: Breach of Contract