Negotiation is an integral part of our existence. In fact, it is impossible not to negotiate. Especially if you are a small business owner. There are tons of contracts that you need to enter into making sure the end results are beneficial to you and your business. To ensure that get the best deal and keep your interests protected upon closing the contract, you will need a good set of negotiating skills. And though negotiating can be a natural gift, it can also be practised and learned.
One way or another, we are involved in some type of communication, that is, the exchange of opinions characterised as negotiation. The essence of negotiations is a successfully agreed deal or cooperation. When every party is content with the end results, mostly you a small business, you significantly determine the future of your company, the success of its business and its survival.
Whether you are a startup or a small business it is important to know how to negotiate contract terms. Negotiate, negotiate, negotiate! By this we mean don’t be pushed around by businesses more established or larger than you. If you are a startup don’t feel that just because you are a new business you have no bargaining power. Whether you are dealing with clients or suppliers you may feel that you have less bargaining power and as such may agree to unfavourable terms which puts your business at risk.
This is a common mistake among startups. If you’re not happy with something, push back on it. If the other party wants the relationship to survive they should be shouldering some of the risk.
Here we take a look at negotiation strategies for startups and what should you keep in mind when negotiating a contract.
Be Prepared
Getting into negotiations means being prepared. There is a lot of work and research you have to do before trying to negotiate with a larger company, a supplier or a potential investor. The more information you have about the other party, the better. On the other hand, try to keep information about you as private as possible, to give you leverage in the negotiation process. This is when an NDA is important. A Non Disclosure Agreement will ensure that all of the information remains confidential. This will prevent the other party from disclosing it to anyone because they will be contractually bound not to do so. We have an NDA in our shop now which you can download and use straight away. If you want to protect your ideas and stop them being stolen then an NDA is crucial.
Break up negotiations into phases
Although very simple and obvious, this negotiating tactic has proven to work. When negotiating a contract that is “all or nothing”, instead of focusing on the big picture, try to break the negotiations into parts. This will help you take a close look at each section, make it easier for all parties to process and come to an agreement on each part separately.
Asking for what is fair
When you are trying to negotiate a business deal, it goes without saying that you have to get familiar with similar business dealings first. Use as many facts as you can, they are always a great asset. This way you can always use the approach that you are only asking for what is fair. Meaning, what you are looking for is in line with current industry standards and market prices. This tactic is best to use when it feels like you are getting nowhere close to reaching an agreement. When you ask for what is fair, you don’t need to negotiate your terms – they are already justified.
Be prompt in your negotiation
When negotiating, time can either be on your side or be the enemy. The more time there is the longer the negotiation process is going to take. Putting a time constraint on negotiating deals can accelerate creative thinking and problem solving, leading to closing the deal faster.
Though being prompt at responding may keep things moving, it also means that the other party may feel rushed into making the decision. You need to use your own judgement to see when you can use time for your benefit, and when it can be a deal-breaker.
Ask the right questions in your negotiation
Don’t be afraid to ask questions and encourage the other party to do the same. After all, negotiation is all about communication. Depending on the type of business deal, here are some of the questions you can ask:
- What can I do to make this beneficial for all parties involved?
- Is this the best offer you can give?
- Can you give me assurance that your product/service/solution will work for me?
- Who are your competitors?
- How do the products of your competitors compare to yours?
- Is there anything else you can add to the deal without cost to us?
- How do you benefit from this deal?
Get a Legal Eye on the Document
It’s really important to get a contract or terms & conditions reviewed by a legal professional before you sign the same. Whilst you might be happy with the negotiations on the face of it. There might be unfavourable clauses which you have missed and which will cause you difficulties down the line. If the other party has had a lawyer draft the document for them then they will no doubt be weighted in their favour. However, that’s not to say that the contract should be wholly unfair to you.
If you’re ever unsure about agreeing to terms or signing a contract get some professional advice first. It will save you a whole heap of problems down the line. We offer a fixed fee legal document review service for this very reason, so don’t hesitate to get in touch.