Top 5 Tips For Negotiating Business Contracts
From the earliest days of mankind when cavemen would trade furs for food, until the modern-day, when multi-billion dollar deals are agreed in opulent board rooms, the art of negotiation has been employed. Whether it is the business owner negotiating the deal or their commercial lawyer, the desire to achieve a favourable outcome is uppermost in their minds.
Where these negotiations become especially detailed is when they get to the sharp end of proceedings and the contract itself is being negotiated. Bear in mind, the contract will be the legally binding agreement which both parties must adhere to so ensuring there is nothing in it that will cause problems for your business, is crucial.
Now, many a book and training course has been published on the art of negotiation so we are not going to pretend we can come anywhere close to teaching you negotiation skills from A to Z. However, here are our top 5 tips to make the negotiation of a contract more likely to favour you than not.
#1 Don’t Rush It
A contract negotiation is not a race to see how quickly it can be done, so slow it down and go at a pace you are comfortable with. Take time to understand everything that is being proposed and remember that a rushed decision is normally a poor decision.
#2 Get Expert Help And Advice
Even the most successful business owners on the planet use experts when they need to, and that should apply to you too. Use commercial lawyers to assess the legal implications of the contract and to ensure it complies with business and commercial law. If the financials are complex, use accountants or financial experts.
By all means, retain the right to make the decision yourself, but to make the best decision possible you should employ the help and advice of the appropriate experts whenever possible.
#3 Take Control
When we say ‘take control’ we do not mean bullying the other side and browbeating them into accepting your demands. Instead, we mean being professional and confident enough in the first place to set and control the agenda. This can be from something as simple as choosing the location for the negotiations, through to making sure it is your commercial lawyers who draft the final contract.
In most negotiations, the side which exercises the greater degree of control tends to have the final agreement closer to what they wanted than not. In other words, holding the reins of the negotiations should mean you can steer the contract in the direction you want.
#4 Be Prepared For Anything
One of the best possible ways to ensure that you have the upper hand in any negotiations is to be better prepared than the person you are negotiating with. You never know when they are going to pull what they think is a surprise that will throw you off, but if you are prepared for it, and better still, have a counter to it, then you are ahead.
#5 Negotiate One Element At A Time
There is an oft mentioned nugget of advice that goes ‘How Do You Eat An Elephant?’, to which the answer is one bite at a time. The same is true of negotiations where you should not be trying to negotiate the entire contract in one big chunk as it were. Instead, agree on it piece by piece so that each section which falls in your favour moves you closer to the entire contract being one you are happy with.