Negotiating contracts is a fact of business. Contracts are often used to set the groundwork for how your business relationship with a vendor moves forward. A contract can specify the products or services the vendor offers as well as prices, delivery frequency, and other relevant details. Compromise is required by both parties when negotiating contracts, and concessions are sometimes necessary. The best way to prepare for this process is to gain a thorough understanding of the counterparty.
Research the Counterparty
You can find information for your potential vendor online. Look for press releases, blogs, news articles, and social media posts written about (or by) the other party. If you can find any, browse online reviews, and see what information is available on the Better Business Bureau's website.
Take notes as you research, so you can refer back to them later. Then, once you've compiled enough information, analyze your notes to see the bigger picture.
Understand the Other Party's Current Clients
Another way to understand the other party is to see what their relationships are with their current clients. Ask your potential vendor who some of their other clients are. What are some of the terms of those contracts? Can they provide references?
Consider it a red flag if a vendor isn't willing to provide references to current or previous clients. You can assume this means they're hiding something, and it may be advisable to take your business elsewhere. While some contract terms are covered by confidentiality, there's no reason they can't disclose others.
Know Your Priorities and Minimums
Understanding the counterparty isn't enough on its own. You must also have a thorough understanding of your own priorities and minimums to get a complete picture. Your priorities are your most important contract goals or what you need to receive from the other party for the arrangement to be worthwhile. Your minimums are the lowest or highest amounts on each priority you can accept while still having your needs met. Create a ranked list of your priorities, and calculate minimums for each primary goal before negotiating the contract.
Additionally, you may find it helpful to consider what you can give up to achieve your top priorities. Consider best-case alternative solutions that compromise with the other party while still being worthwhile to you.
Create an Attractive Contract
Don't underestimate the power of an attractive contract. You want the contract to be detailed enough to cover all essential terms and answer any questions the counterparty may have. The contract must flow seamlessly from one section to the next in an organized manner. Even at a glance, you want the agreement to be visually appealing. It’s easy to convert JPG to PDF to help with this.
Understanding the Counterparty Is Crucial When Negotiating Contracts
You must understand the counterparty to experience success in negotiating contracts. Only when looking at the complete picture can you successfully compromise while still ensuring a contract is worthwhile.
Consider joining your local chamber of commerce for more valuable business resources, networking opportunities, and discounts.
This Hot Deal is promoted by Columbia County Chamber of Commerce - NY.