Today, a guest post from Jon Tucker -
Business deals offer excellent opportunities to increase revenue and reduce risks for both parties. Contracts start out as a list of basic requirements without the legal jargons that are written into the document later. Both parties come to the table with basic ideas about the final deal. As such, the side with a refined negotiation strategy receives better terms from each session. The one with great negotiating skills makes the other party to believe that the entire situation offers a win-win result for all the parties involved.
But if you feel that you need to have a sound arrangement in place that actually is a win-win proposition for parties involved, there is more than one strategy to choose from. The following list of 11 tactics may help in guiding the contract negotiation meetings to a beneficial close. Let’s discuss them in detail.
1.Create manageable segments
Each part of a contract should be discussed to prevent an “all or nothing” approach to the contract. Agreement should be reached on each segment to allow the parties to determine which terms make the most sense. Logical pieces of the contract are formed as the list of requests is reviewed and discussed. Difficult portions should be negotiated early to evaluate the probability that a deal can be created.
2. “Asking for what’s fair”
Certain requests may seem unreasonable when mentioned for the first time at the negotiating table. The requesting party should use a friendly tone and state something like; “I am only asking for what’s fair.” This line allows the other party to evaluate the request.
3. Resolve issues beforehand
Contract negotiations can lead to arguments about semantics if both sides are not focused on resolving each issue. Adopt a problem solving approach rather than rejecting each other’s ideas and suggestions. Problem solving will neutralize conflicts as each party will look at the possible alternatives with a logical perspective.
4. Take control
Advantages can be created when one party offers to host the meetings. Time, agenda and pace offer the framework necessary to move forward on one party’s terms. The party who takes this initiative will have more leverage. But the other party can also decide to take turns in hosting business meetings and progress accordingly.
5. Set priorities
Prior to each meeting, the parties should know what parts of the contract are mainly going to be discussed. This way, not so important parts of the contract will not consume time and energy meant to focus on really important issues.
6. Offer concessions
Both sides should know which contract terms can be offered in exchange for higher priorities. A contract detail that the other party wants can be used to leverage to win a higher priority at a later date. Such exchanges between parties about actual contract points will allow them to make progress during every meeting.
7. Ask questions
Effective negotiations are lively conversations where information is exchanged in an open discussion. Questions that spark more dialogue will create a positive tone. Both sides will learn more about the partner if questions are asked about facts surrounding the contract negotiations. Therefore, it is in the best interest of the parties to listen carefully to each other and assess various business options.
8. Acknowledge agreement
True statements from the other party should draw verbal agreement throughout the discussions. Positive comments prevent escalating emotions when one party does not feel involved in the conversation. Each meeting should end on a positive statement about the progress made.
9. Know the details
Prior to the next meeting, the parties should conduct substantial research to support the negotiations that are scheduled to take place. Information about the other party can be helpful in finding negotiating positions that will remove barriers to agreement.
10. Handle ultimatums
Deal ending statements should be anticipated. One tactic used in negotiations is to drop an ultimatum in the midst of a meeting to see how the other party responds. Immediate responses can cause the contract to fall apart or be signed. The party on the receiving end of the ultimatum must remain aware of this strategy and be prepared.
11. Avoid feelings
Business contracts can offer a lifeline to a struggling business at a crucial point in time. Honest negotiations should include open dialogue without playing on the other person’s situation. Emotions should be removed from the situation and every decision should be made objectively after taking into account facts.
To conclude, win-win business negotiation tactics build bridges that can strengthen a business operation. Bankers, attorneys, accountants and other professionals play important roles in finalizing deals that will stand up in court. Regular meetings with each professional will prevent problems from stalling the negotiations with another party. Where large contracts require more negotiating time, small agreements dictate the same steps taken in larger segments to save time.