Businesses frequently make agreements with one another that (in the best circumstances) lead to mutual profit. While the ideal situation is to make sure all parties involved benefit, each side will typically try to extract as much as it can from the agreement. This means the party with the best negotiation skills usually comes out on top.
In order to be successful at hashing out corporate contracts, there are a few steps and tactics one should follow.
Know the Other Parties
One of the first things you need to do is to learn about the other party (or parties) who will be taking part in the negotiations. Do some research, ask questions, and find out the following information:
- What they would seek in the agreement
- What they can offer you based on their assets, position in the market, etc.
- Negotiation tactics they are likely to use
- Their strengths and weaknesses as a business and as a negotiator
- The amount of leverage they’d have in their position
One of the keys here is to determine how much bargaining power they have. If they have a more secure position, they will be less likely to budge on key issues. On the other hand, if their position is a bit weaker, you’ll have an easier time getting what you need from the contract.
Know Your Position
The next factor is to know your position. Find out what you need most from the contract. This will help you determine which provisions would be most important to you while allowing you to make concessions on less important matters as needed.
Determining your position also helps you know how much bargaining power you have. Companies in particularly strong positions can offer terms on a “take-it-or-leave-it” basis, allowing you to get more of what you want from the negotiation process.
Apply the Right Pressure
Once you’ve determined your position and those of the other parties, you can exert pressure in calculated ways. It may help to indicate that you have other options to choose from who might give you more favorable terms. In addition, it’s important to indicate which terms you need versus which ones you won’t accept.
Putting the right amount of pressure on the other parties helps you move negotiations forward while also revealing what the other party wants most.
Even as you apply pressure, you still want to make concessions. Even if you’re in a “take-it-or-leave-it” position, you don’t want to develop a reputation as one who takes everything in every deal. Make sure you provide the other parties with what they really want out of the deal while still protecting your own interests.
Deal with Legal Matters
Once all business matters are settled, you’ll need to begin drafting the actual terms of the contract. Contracts handle various legal matters in addition to their business-oriented provisions, and those will often be points of negotiation themselves.
During this stage, it’s helpful to have an attorney (such as a business lawyer from Hart David Carson LLP) on your side. The insight a corporate attorney provides at this point—as well as throughout the negotiation process—gives you a clearer idea of where you stand in the agreement and how to get terms that benefit you best.