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Most businesses use at least one outside vendor to provide them with a valued service. Some use more than one at a time, depending on the type of business. At one point or another, every business that uses a vendor will need to renegotiate the contract or service agreement.
These situations can be challenging, but if done properly, renegotiation can be an easy process that will enable both parties to feel like they got a good deal. Below are some tips to consider when renegotiating with a vendor.
1. Be honest regarding why you need or want to renegotiate. The reasons could be many, including a need to cut budgets, loss of a client that required the service, the addition of new staff to handle the service internally, or a lack of performance from the vendor. Whatever the reason, communicate that to them so that false expectations aren’t created.
2. Be clear. State what you want from the relationship and express what your goals and expectations are. From there the vendor can tell you how he can help and present a strategy for helping you accomplish these goals.
3. Set a clear budget. Be open and precise about what your budget is and what you are and are not willing to pay for.
4. Prioritize tasks. Let vendors know what tasks are the most important and which you want to see completed first. This will allow vendors to focus on what’s most important and adjust budgets to meet these priorities.
5. Set milestones. Have a recognition system in place that awards and highlights key milestones. This will aid in determining the value a vendor provides and give a launch point for renegotiating and continuing a relationship.
By following these guidelines you’ll put your company in a better position to negotiate a program or deal that will be most beneficial to you and your vendors.
T. Craig Bott
President and CEO
Grow Utah Ventures
Salt Lake City
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