9 Things You Need to Remember While Negotiating Contracts
There are several aspects of business that can only be learnt through actual experience. One of them is negotiating contracts.
Several people fear the negotiation process because it is an intrinsically uncomfortable process. Asking for more money or making personal demands doesn’t come naturally to everyone. But with the right toolkit, you can breeze through contract negotiations. And you’d better get used to it, because you’ll have to handle a lot of contracts whether you’re a business owner or a company employee.
Having the right mindset is critical to contract negotiations. You have to believe that you are going to get your way. Bring a positive attitude and a smile to the table. You’re not signing contracts with the enemy. The people you’re negotiating with are going to be your business partners in one capacity or another.
Let’s take a look at some things you need to remember when you’re in the process of negotiating contracts.
1. Be patient
Don’t rush to get a contract signed. Rushed contracts usually leave one or both parties dissatisfied. It’s understandable if you want to get the negotiation done with, but taking the extra time to examine your contract will benefit you tremendously in the long run.
2. Involve an expert
You might know what you need from a contract in terms of an overall business output, but you could get trapped by the legalese. Get a lawyer you trust on board to frame the wording in a way which protects your overall interests. Even if you’re good at negotiation, involving an expert is always a good idea.
3. Don’t forget term sheets
Term sheets are basically a broad overview of the terms of your contract. Before you get into the specifics, it’s a good idea to make sure all parties involved agree on the big picture.
4. Take it one step at a time
Negotiating a complex and lengthy contract is an inherently tedious process. In the beginning, make sure you’ve got the basic details agreed upon. Making some headway is crucial to the overall success of the negotiations. After you’ve established a rapport with the other party, you can dive into the deeper, more difficult issues.
5. Think about the specifics
The flowery language on a contract might make for good reading if you’re of a certain leaning, but you need to understand what it translates to in the real world. How much will you be making?
6. Use the phone
Emails are notoriously difficult to decipher at times. You aren’t aware of the body language of the sender and sometimes people can word things in a confusing manner because they don’t have the best command over the language. If you’re unsure about certain things in your contract, pick up the phone and have a conversation. It will help sort things out.
7. Don’t fret too much about the first draft
The first draft of your contract is just a starting point. Don’t be alarmed if there are certain things in there which aren’t to your liking. It’s called a ‘negotiation’ because you will be changing certain aspects of the contract.
8. If you can’t make the tough calls, get someone who will
If you’re not a naturally assertive person or find it difficult to be demanding when the situation calls for it, ask for help from someone who is capable. It could be your business partner or even a spouse.
9. Do your research
You don’t want to make outlandish demands that the party you are negotiating with simply can’t afford. Take some time and do your research. See what similar services or products cost in the industry. Ask some experts for advice.
Negotiating a contract is like a very slow game of chess, except both parties need to come away from the table victorious. Before you begin the process, figure out what your short and long-term goals are. If you have a clear vision, it will help you navigate the tricky waters of contract negotiation better.
Quantum Advisory is a business accounting and advisory firm that empowers family businesses to step up, scale up and sell up. Visit www.qagroup.com.au or call 1300 700 711 and start the journey.