Before you enter into a business agreement with other parties, it's important to read about the basics of negotiating. This article discusses tips on negotiating contracts.
These tips on negotiating contracts may be helpful in a variety of situations. Contract negotiation doesn't only occur between business partners; it occurs between businesses and real estate owners, customers, vendors, and many more parties.
The goal of negotiating contracts is always to minimize risk and maximize profit, but it's never a straight forward process to get to that goal. These tips on negotiating contracts, however, may help get you closer to success.
Tip 1. Work out the issues of the contract together as partners.
If you come to the negotiation table having already decided how the meeting will go, you'll pitch an idea or plan that will most likely be rejected. This is because it wasn't created jointly. Your partner may be suspicious of your motivations and feel as though they aren't in their best interest. If, however, you come to the negotiation table ready to work out the issues together, you'll both feel ownership of the deal and more likely to be satisfied with the outcome.
Tip 2. Be willing to compromise on less important issues.
Know what issues are most important to you so that you can prioritize and leverage the other issues to your advantage. By compromising on matters that are less critical to you, but may be very important to your partner or vendor, you may be able to negotiate a better deal. Your partner will feel like they came away with a good deal in the end.
Tip 3. Don't take all the profit.
While your goal is to maximize profit, so is your partners. Remember that by leaving them room for profit, they will want to work with you again in the future.
Tip 4. Ask for what is fair.
If you approach negotiations with the strategy of asking for what is fair or standard in that industry. By doing that your placing the burden of negotiation on the other party. It's hard to argue against what's fair or standard in that industry, therefore, it will be up to the other party to argue that they are the exception and that they deserve something better.
Tip 5. When you are not sure, ask more questions.
Avoid bring emotions into negotiation. Stick to the basic facts and take away all the personal feelings. Don't argue or get upset with the other party. Instead, question their argument and look for their motivations or influences. Find out what is driving their argument and work together to come to a solution.
For questions or more complex negotiations, consult a commercial litigation attorney.