9 Things You Need to Remember While Negotiating Contracts
There are several aspects of the business that can only be learned through 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 does not come naturally to everyone. However, with the right toolkit, you can breeze through contract negotiations. Moreover, you had better get used to it because you will have to handle a lot of contracts whether you are 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 are not signing contracts with the enemy. The people you are 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 are 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 is understandable if you want to get the negotiation done, 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 deal regarding 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 are 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 conditions of your contract. Before you get into the specifics, it is 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 have got the necessary details agreed upon. Making some headway is crucial to the overall success of the negotiations. After you have established a rapport with the other party, you can dive into the deeper, more difficult issues.
5. Think about the specifics
The flowery language of a contract might make for good reading if you are of a particular inclination, 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 are not aware of the body language of the sender, and sometimes people can word things in a confusing manner because they do not have the best command over the language. If you are 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 are not to your liking. It is called a 'negotiation' because you will be changing certain aspects of the contract.
8. If you cannot make the tough calls, get someone who will
Ask for help from someone who is capable if you are not a naturally assertive person or find it difficult to be demanding when necessary. It could be your business partner or even a spouse.
9. Do your research
You do not want to make outlandish demands that the party you are negotiating with just cannot 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.