Research Is Essential Before Contract Negotiations
Whether a buyer or seller, you should never go into contract negotiations blindly. You should have a complete understanding of the counterparty and your own needs before time. Only when you see the complete picture can you effectively negotiate a profitable contract that meets both party's needs.
Research Your Potential Vendor
Research the other party. Look online for press releases, news articles, and blog posts published by the counterparty. Browse the company's website, and see if you can determine who else they're doing business with. If you can, reach out and ask their other vendors or buyers about the other party. What do their contracts look like? How satisfied are they with their business?
Read articles on the other party's industry. How is the current economy affecting their industry, and what can you surmise from this information? For example, if the current economy is making business difficult for the other party's industry, you may be able to bargain for a better deal.
Calculate Your Minimums
Before negotiations, you must know your minimums. Figure out your primary objectives and place them in a ranked priority list. Then, calculate the minimums for each primary goal. These will be the lowest (or highest) you can go for the deal to be profitable. For example, vendors will likely have the lowest price per product they can receive for the deal to be beneficial. Buyers will likely have the highest price per product they can afford.
See the Complete Picture
You must see the complete picture to be successful in contract negotiations. Look at your research of the counterparty and your predetermined minimums. Do you believe the other party can satisfy your minimums? Are there additional benefits to doing business with the counterparty? What can you surmise once you have all the information?
Even when you see the whole picture, there may be times when the other party surprises you. Perhaps they can offer a better deal than you first imagined, or maybe the deal isn't as good as you'd hoped. During contract negotiations, it's better to walk away if the other party can't meet your minimums. Walking away is an acceptable outcome that's drastically better than accepting a deal negotiated below your minimums.
Put Effort Into the Contract
You'll be ready to create your proposed contract once you've done your research. Don't cut corners on this step. You need a contract that shines on its own. Pay attention to detail and answer any potential questions the counterparty may have inside the contract itself. Organize the sections, so they're easy to follow and understand. You want the contract to be attractive, not an eyesore. It’s useful to convert PDF to Word to make a professional and easily accessible file to share.
Practice your oral presentation ahead of time. Use body language to appear confident yet friendly. Remember, you're selling both the contract and your company during your presentation.
Research Before Contract Negotiations Helps Bring Success
You must see the whole picture to be successful when negotiating a contract. This means researching the counterparty and calculating your minimums.
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