One of the most common fears in business is the “fine print.” Huge sums of money can be spent to hire the right people to use the right words to take advantage of an unsuspecting negotiator—and it often goes unnoticed before he or she signs the dotted line.

But that doesn’t mean you need to be suspicious of someone every time that you negotiate a contract. It just means that you need to be careful. When you don’t take negotiating contracts seriously, it can have a very negative effect on your business.

In fact, for small business owners and entrepreneurs, poor contract negotiation is often one of the biggest pitfalls involved in getting a business off the ground. Whether it’s because of malice, inexperience, or simply a lack of attention, a bad contract can sink a good deal quicker than a cannonball sinks a toy boat.

Every contract will look different, but negotiation doesn’t have to. Here are five strategies that you can use every time to help negotiate a fair contract that takes care of your—and your fellow negotiator’s—best interests.

Take Initiative

If you really want to set yourself up for success, it’s important to be proactive about your contracts even before the negotiation process begins. Start by offering to draft the contract: It’s a practical way to ensure that you’re very familiar with its language, and it’ll help you to be more aware of potential pitfalls and errors.

Drafting the initial contract isn’t just for your own good either. It’s mutually beneficial to you and your negotiation. You’re offering to lighten the workload, while also showing that you’re serious about having their business.

That said, be sure that you don’t simply make the offer and then run with whatever points you think are most important for the contract. That’s sure to quickly turn a client off to your business or vice versa.

To see why this is so important, consider businesses like this New York-based publishing company, which tried to create contracts that only protected its own interests. The company used sneaky language that was riddled with legalese to take advantage of their unsuspecting clients—and it gained them an internet-wide blasting that was ultimately more damaging in the long run.

Avoid this kind of language in your contracts, and you’ll save your business from gaining a dirty reputation. Instead, upon offering to draft a contract, send an email that clarifies the points that are important to both parties before beginning to write.

Know The Other Party’s Needs and Desires

Even after both sides have discussed the points that they feel are important for the contract, it’s up to you to understand the full extent of the other party’s true needs. If you try to negotiate outside of their means, you’re going to run into a lot of unnecessary roadblocks and revisions.

Do some research on your client before you begin drafting the initial contract, and you’ll have a much easier time with the negotiation.

Some basic things to research are the other party’s financial limits—spending habits, business costs, etc.—and it’s basic business model. Obviously, negotiating to fulfill an order of paper goods to a youth center will look much different than an order going to a corporate office. If you want each one’s business, your contracts will have to cater to each client’s individual means and needs.

This same rule applies if you’re seeking to secure goods for your own company. When negotiating for a company’s services, you have to draw a tactful line between asking too much of them and giving them too much wiggle room. You can’t ask a mom and pop hardware store to produce on Home Depot’s level, but that doesn’t mean they get to run the clock.

Simply put: don’t overstep your bounds. The last thing you want to do in drafting a negotiation is to intimidate the other party out of doing business with you.

Be Patient

A common mistake that business owners and entrepreneurs who are just starting out make is being impatient. While there’s nothing wrong with persistence in seeking a client’s business or services, it’s important to be confident in your offer. After you make an offer, some may take longer than others to get back to you with a counter offer… it’s OK to wait on them.

People often take silence as a loss of interest, and they back off of their own initial offer and go lower. Don’t do that. Never negotiate against yourself. Instead, allow your clients to make a counter-offer before simply handing them a lower number.

If the other party is unresponsive, just send another follow-up email, as they’re likely just taking the time to carefully review your offer. Don’t allow your impatience to come across as desperation and ultimately lose you money.

Propositions Should Be Value-Adding

If you really want to succeed in your negotiations, make sure any and all of the propositions in your contract drafts add value for the benefitting party. Just as you don’t want to negotiate outside of you or your client’s means, nobody wants to pay for a service that they could perform themselves.

Be mindful of things that you or your client can already do and leave them out of the negotiation.

All of the services offered in your contract should be helpful beyond a client’s current reach. Likewise, your services should have as low an impact on a client’s internal resources as possible. As an example, if a potential client already has a warehouse available; it’s not much of an incentive for the contract to include a provision for additional storage.

Have an Edge

In trying to have the “upper hand” in a contract negotiation, you’re not simply trying to best the other party: you want to win their business. You can be transparent, assertive, patient, and valuable, but you’re not going to get the terms you want if you’re just as good as anybody else—either in your offer or your services.

You don’t want the message of your negotiation to be that you’re simply trying to save the client money. Make sure your clients know why they can’t afford to reject your deal. You don’t have to sell yourself short, but if you’re asking for a higher value or better rates, then the client needs to know that they’re getting the best service or most reliable business around.

Obviously, you should couple these tips with a good lawyer’s eye when you’re forming your final contract, as it’s all too easy for a legal snafu to cause big losses. To see why, just ask former NFL player Ricky Williams, for whom an inexperienced lawyer and some bad dealings turned a seven-year, $68 million contract into the league minimum and an ankle injury.

If you implement these five strategies in your next contract negotiation, you could very well avoid a lot of heartache. But to truly be a long-term business success, you’re going to have to make good on what you’re negotiating. If you really believe in your business and do your best to try to meet the other party’s needs, contract negotiation will stop being a source of stress and start being a platform to really grow your company.

About the author

Matt Faustman

Matt Faustman

Matt is the co-founder and CEO at UpCounsel. Matt believes in the power of online platforms to change antiquated ways of life and founded UpCounsel to make legal services efficiently accessible. He is responsible for our overall vision and growth of the UpCounsel platform. Before founding UpCounsel, Matt practiced as a startup and business attorney.

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