For many business owners, nothing is more exhilarating than successfully negotiating a big contract or new partnership. A new contract can take a company to the next level or demonstrate to potential customers and partners that you and your company have arrived.
A critical component of negotiating a contract is doing so in a way that is beneficial to both companies involved. If there isn’t some give and take involved, most potential partners or customers will quickly realize that you’re probably not the best organization to work with and will simply go elsewhere.
Another critical aspect of successful negotiation is ensuring your potential partner or customer understands your objective for promoting the final product. Often you may think you are on the same page, but when it is all said and done, one side may not be as vested in the process. Identify early on who will be responsible and make a commitment as to how you will work together or who will take the lead with the media, trade shows, and other promotional opportunities.
Below are some tips that have helped me in the beginning stages of negotiations for new deals or partnerships.
Identify the right partner or supplier.
Understand how the partnership or contract will benefit not only you but also the company you’re negotiating with.
Make a detailed list of your goals and objectives, including a prioritized list of the must have items you want or need in order for the deal to go through.
Create a list of the items you’re willing to concede in order to close the deal. This list should also be prioritized in order of the items you can live without.
Find out who you will be negotiating with. As much as possible, know their positions and responsibilities as well as what their goals and objectives are.
Set a time table for completing the negotiations.
Never lock in on one company. Have a list of companies you can negotiate with and then prioritize this list. If you think there is only one company you can work with, desperation can set in and you’ll probably end up with a bad deal.
Rod Tiede, President and CEO
Salt Lake City, Utah
Want to improve the way you run your business? Entrepreneurs, academics, and consultants from diverse industries offer practical advice on a variety of topics each business day.
To submit a tip for consideration, first check our archive of previous tips to make sure you're not repeating a tip someone has already contributed. Then send the tip to Small Business channel contributor Michelle Dammon Loyalka. Because of the volume of material she receives, she may not respond to each individual.