Negotiating a contract with a big company or government agency can be harder than making the sale and sometimes requires a different approach than negotiating deals with smaller businesses. Don’t let contract negotiations (or the other company’s negotiator) intimidate you! Use these 8 negotiation tips to get a fair deal.
Learning how to negotiate business deals is a skill business owners need to develop. That’s because getting a company to agree to use your products or services may be only half of the challenge. Once you have convinced them you can do the job they want done, you may still have to negotiate the terms of the deal. And that chore may be more difficult than convincing the company in the first place that they need what you are selling. Conflicts may arise over price, delivery terms, quantities, or even the length of the contract.
Depending on the company with which you’re negotiating, the size of the contract and the negotiator, tactics that might be used may include anything from low balling you on prices, to insulting you, taking weeks to respond to your inquiries or counter-offers on price, or demanding control or rights you don’t want to give up.
How should your small business handle negotiations? What can you do to avoid being taken advantage of by bigger or more aggressive negotiators? Over the years, my small business has successfully negotiated contracts with some of the biggest corporations in the US, as well as smaller companies. We’ve also been a government contractor and subcontractor. Here, based on my own experiences as well as some great advice from attorneys who have helped over the years, are 8 negotiation tips to help you get a fair deal when you negotiate a contract.
Know all of your costs. Be sure you carefully evaluate all the expenses that will be involved in fulfilling the contract, not only the cost of inventory or goods. Other costs may include, cost of your staff time, transportation (if travel is involved), delivery (for products), customer service, any extra insurance you may need to secure, loans you may need for equipment or meeting payroll. Winning a contract from a big company is only worthwhile if it’s profitable
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Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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