Business negotiations can be tricky. As parties go back and forth to reach an agreement, the parties are struggling for leverage and favorable terms. In most negotiations, both parties compromise on some issues. Rarely do all parties walk away from business negotiations with everything that they desired when they began the process. Even though negotiation skills are important, it is also important to remember that there is a legal aspect of business negotiations.
11 Contract Negotiation Strategies to Get You What You Really Want in Business
When you negotiate an agreement with another party, you enter into a legally enforceable contractual agreement. If either party breaches the terms of the agreement, the other party may take various legal steps to enforce the agreement. Legal steps may include filing a lawsuit to recover damages or to enforce the other party to comply with the terms of the agreement. Fighting a breach of contract lawsuit can be expensive and time-consuming. Therefore, it is better to take your time and negotiate a deal you know you can live with in the long-term. Also, involve a DC business attorney who can advise you of your legal rights and ensure that the final agreement is not harmful or prejudicial for you or your company’s interests.
Eleven Tips for Negotiating Business Matters
Below are 11 tips for business negotiations. The first few tips apply to general negotiation skills you can use in many situations that involve compromise with another party. The final tips relate to specific negotiation strategies you might want to employ depending on the situations and matters you face when negotiating business deals.
The first five strategies deal with the overall tactics used in business negotiations.
1. Don’t Make it Personal
Stick with the facts and only the facts related to the situation. When you allow your personal feelings to enter your business negotiations, you risk the chance of losing your focus. However, it is easy to become emotional when negotiations directly affect your personal life, such as the sale of a family business or settlement of a disputed legal matter.
Unfortunately, emotion can be used against you during negotiations. Avoid using phrases that include “think” or “believe.” Instead, insert facts into the sentence. Also, do not allow what you may consider personality flaws to impact your judgment. Instead of focusing on another person’s lack of social graces, focus on an agreement that meets the needs and goals of all parties.
2. Prioritize Your Goals Before the First Meeting
Many negotiations focus on the benefits and risks for each party. However, some benefits and risks should have a higher priority than other matters. Before the first meeting, list every benefit and every risk associated with completing the deal. Prioritize those items from most important to least important. Focus on gaining the upper hand for benefits and risks higher on your priority list. By prioritizing your list, you can quickly identify matters you are willing to negotiate away in exchange for matters that appear higher on your priority list.
Listing the benefits and risks associated with the business deal also allows you to perform one last analysis to ensure that you want to proceed with the negotiation because it is the best option for attaining your ultimate goals.
Before the first meeting, list every benefit and every risk associated with completing the deal.
3. Assume Control Before Beginning Negotiations
The party in control of the time, location, pace, and topics of the negotiations may have an advantage over the other party. When you are in control, you have more liberty to decide what topics you discuss and when certain topics are introduced into the negotiations. You can determine which topics receive more time on the agenda for discussion (the topics high on your priority list for example) compared to topics that receive minimal time on the agenda.
To avoid the appearance you are competing for control, you may want to simply volunteer to assume the duties of locating a venue and preparing an agenda because you have additional staff available or you are familiar with the geographical area and can locate a space to accommodate the negotiations. If the other party insists that it wants to oversee these duties, suggest that both parties appoint an agent so both agents can work out the details fairly for both parties.
4. Conduct Your Research in Advance
Preparation gives you a huge advantage during business negotiations. You want and need as much information about the other parties and the matters at hand before you walk into the room for the first meeting. Information can give you bargaining power. Knowing the strengths and weaknesses of the other party’s position may give you leverage over certain areas of the deal.
For example, knowing that the other party has agreed to vacate their current location by a specific date can help you negotiate lease terms for your warehouse that may be more favorable to you. This is especially true if the other party has limited options on the table but must choose quickly because they have obligated themselves to move out of their current location. Simply having this knowledge walking into the negotiations can result in more revenue for you.
Information can give you bargaining power. Knowing the strengths and weaknesses of the other party’s position may give you leverage over certain areas of the deal.
For business negotiations that involve high-dollar outcomes, invest in an investigator or other professional to conduct thorough research into the other party.
5. Don’t Feel You Need to Arrive at an Agreement at the End of One Session
Business negotiations can often take days or weeks to complete. Some transactions could take months to negotiate. Placing an arbitrary self-imposed deadline on negotiations could cause unnecessary stress and anxiety for all parties. The urge to meet the deadline could cause terms that are not beneficial to either party.
For larger deals, it's helpful to set several deadlines for sections of the deal. In other words, your first negotiation session will deal with just one portion of the final deal. Each successive negotiation meeting addresses another portion of the deal. Sometimes, waging a small battle can produce more rewards than waging an all-out war with the other party to arrive at a deal that covers all terms of the business transaction.
The next six sections deal with various strategies for business negotiations that can help you achieve your goals for an agreement.
What is your negotiating style? There is no one “right way” to negotiate a business deal. Often, negotiation strategies should be flexible so you can adjust your strategy throughout the process to get the best results. You may use one strategy only to discover that you need to switch to another negotiation strategy to protect your best interests. Sometimes, you may borrow certain tips from multiple strategies to create your unique negotiating style.
6. Questions versus Demands
Sometimes asking questions instead of demanding concessions can lead to an agreement between the parties. If the other party is taking an absolute stand on a specific matter, try asking the party why this matter is important instead of arguing about the point. Arguments and disagreements can shut down negotiations quickly. However, asking questions allows parties to continue discussions without feeling as if they are being attacked.
7. Try to End Each Session on a Positive Note
Make it a priority to end each business negotiation session on a positive note by finding points that all parties can agree upon. It could be difficult to enter the next phase of negotiations on a positive note if the previous negotiation session ended with arguments and no agreements. Even if you agree on a small matter low on your priority list, the positive feeling can transition into the next phase of negotiations. Collaboration is the key to successful business negotiations in most cases. You cannot have a collaborative effort if you cannot agree on the smallest details.
Even if you agree on a small matter low on your priority list, the positive feeling can transition into the next phase of negotiations.
8. The “Fair” Approach for Business Negotiations
Asking for what is “fair” implies that you are not seeking to take advantage of the other party, but you are only asking for what any other party would ask for given the same circumstances.
This strategy can be very effective if the other party values industry standards and current trends. If you provide facts and figures to support your position, the other party must then argue for deviating from industry standards. Your negotiation strategy places the burden of proving that the agreement they propose is fair and just. If not, it places the other party in the position of offering concessions to offset the terms of the deal that deviate from industry standards and accepted norms for your particular business deal.
9. Give and Take Strategy
Each party should walk away from a business deal feeling as if they have a good deal that benefits them. For that to happen, both parties should offer certain concessions and concede on certain points to arrive at an agreement beneficial for both parties. The art of negotiating is knowing how to arrive at a deal that makes everyone a little unhappy about certain items while making them very happy or most items.
A strategy using offers and concessions is about compromise and meeting the other party somewhere in the middle. You never want to allow the other party to know what you will accept as a last resort to make a deal. Again, this involves prioritizing your benefits and risks so you have a clear idea when you will counter-offer and when you will concede.
10. Whatever It Takes to Get to Yes Approach
Sometimes, you may be willing to do whatever it takes to get to an agreement with the other party. This business negotiation strategy involves using a great deal of problem-solving techniques to see past the personalities and parties involved so you can focus on whatever matter is bringing you to the negotiating table. You may need to put past differences aside, ignore personality conflicts, and compromise on some of your higher priority matters to arrive at an agreement you can live with, even though it may not be the agreement you would have preferred.
11. Walk Away or Deal with Ultimatums
Unfortunately, there may be times when you must deal with another party making ultimatums and stubbornly refusing to negotiate or compromise. If the deal is important to you, then you may need to concede that you will need to give up some things you were not originally willing to give up for an agreement. Likewise, if the other party has more leverage, you may need to accept that you are the weaker party and give in to the ultimatums to close the deal.
Only you can determine whether the deal is worth any concessions you must make. If not, then you may need to walk away. Sometimes, walking away may give you power and place you in a stronger negotiating position. Unfortunately, walking away may also end negotiations completely. If you employ this business negotiation strategy, make sure you are willing to give up the deal before you walk out.
Sometimes, walking away may give you power and place you in a stronger negotiating position.
How Can a DC Business Attorney Help You?
Business negotiations can be stressful and challenging. Developing a negotiating style takes time and experience. If you are unsure about your negotiating skills or the deal you are working on involves complicated legal matters, consult a DC business attorney.
A DC business attorney can help you avoid some pitfalls that many businesses trip over during negotiations. The attorney can also protect your legal rights and your best interests during all phases of the negotiation, including drafting clear and concise legal documents to ensure the terms of the agreement are enforceable. Before entering into any business agreement, it is best to consult an attorney to review the contract and agreement to avoid potential legal problems in the future. Contact Thienel Law today. DC business attorney Steve Thienel is dedicated to assisting clients in Maryland, Virginia, and throughout the DC Metro area.