The ability to successfully negotiate contracts is one of the most important skills in business. If you lack someone in your organization who can negotiate the best possible deals with vendors, clients and so on, your chances of being in the black at the end of the year are pretty slim.
Different negotiation strategies are available for different personalities, but there are core things to keep in mind for virtually every business negotiation. Here are some of them, as provided by Entrepreneur magazine:
- Prepare. The more you know about the party you are negotiating with, the better position you will be in. This means learning as much as you can about their weaknesses from business associates. It is also smart to have a goal or price target in mind before getting to the bargaining table.
- Leverage you advantages. For instance, if you are the seller in a seller’s market, you can use that to get a better price. Demonstrate your knowledge and expertise and take the initiative early.
- Avoid self-sabotage. If you are the buyer, keep limitations in your bargaining position to yourself, such as your budget. Have things you can give away in negotiations that do not hurt your position — things that would be nice to have, but are not necessary.
- Price is important, but not the only thing. The price of the contract should be the primary focus, but other factors matter too, like the schedule to perform, express warranties, and terms and conditions.
Of course, there is much more to contract negotiations, including whether certain clauses are legally enforceable or not. A business attorney can review a contract for possible concerns.