You’re watching Netflix and marveling at the way those sharp suits construct a business deal. The bad news is you’ll probably never be that shrewd, experienced, or ruthless; the good news is you don’t have to be.
Being a regular human rather than a scripted stereotype actually goes a long way in contract negotiation, so high five for already having that down. Now all you need is a little extra know-how, and before you realize it, you’ll be out-maneuvering even the savviest suits in the room.
To get you started, here are five essential strategies for a successful contract negotiation.
1. Always be prepared
If you were ever a Scout, you’ll know preparation is crucial to any task. Before entering a contract negotiation, start by clarifying your goals and objectives. Are there any specific terms or conditions that are non-negotiable? Having a clear understanding of your desired outcomes means you’ll be better equipped to advocate for your interests.
Part of being prepared means knowing who the decision-maker is. Gather any relevant information you’ll require, such as what their needs, priorities, and constraints are. Understanding their perspective can help you build mutually beneficial solutions. Research industry standards and comparable deals to support your arguments and strengthen your position.
A business health check-up will likely come in handy here. The purpose of internal audit is to identify your business’s objectives and evaluate its governance processes. By promoting accountability and transparency, you positively contribute to your organization’s success and reputation. Furthermore, identifying your core objectives will give you the insight needed to get the most out of your deal.
Preparation also involves anticipating potential challenges and objections. Consider different scenarios and develop alternative strategies to help you overcome any obstacles. Your audit trails can help back you up. The more prepared you are, the more confident and adaptable you can be during the negotiation process.
Always start with a draft. A simple contract that outlines the key principles will not only provide a handy starting point for mutual deliberation but reduce the time spent discussing the final terms. This may be daunting, but you can use a contract automation platform to kick off the process.
2. Practice active listening
You already know that a contract negotiation isn’t just about presenting your demands—it’s also about actively listening and taking the time to understand the other party’s perspective. By demonstrating that you value their input, you create an atmosphere of respect and collaboration.
Active listening goes beyond simply hearing what they’re saying—it involves paying attention to non-verbal cues too, such as body language and tone of voice. These can provide valuable insights.
Once you understand the other party’s needs and motivations, you can find opportunities for compromise. This is where being human counts in a big way, so double down and you may be surprised at how far mutual respect and empathy can go.
Read also: How to successfully negotiate an agreement?
3. Be creative
Pushing the envelope, thinking outside the box—these are the (ironically) hackneyed phrases we’re fed to encourage us to find creative solutions for our businesses. But where do you start? Try focusing on positions and demands and exploring underlying interests and needs. Think more “mate” than “checkmate”, and look for win-win opportunities that can satisfy both parties. This collaborative approach fosters goodwill and builds long-term (read: lucrative) relationships.
The outcome of brainstorming can effectively help close the gap between your business and large corporations. Ideation sessions, for example, can be incredibly valuable during the negotiation process. Sometimes, the best solutions arise from unexpected places, so be open to new approaches.
Effective problem-solving involves considering the long-term implications of the agreement. A well-written B2B contract can be the difference between a successful business relationship and countless sleepless nights. Will the proposed terms and conditions still be viable and beneficial in the future? By taking a forward-thinking approach, you can avoid potential pitfalls.
4. Build trust
Trust forms the foundation of successful negotiations. Establishing trust with the other party creates an environment of openness, transparency, and collaboration. This takes time and effort, but the rewards are worth it.
Be reliable and follow through on your commitments. Consistency in your actions builds credibility and fosters trust.
More practically speaking, you can show you’re a genuine and reputable business by being correctly registered, having a professional website, and having a solid online and social media presence.
Building relationships is another crucial aspect of negotiation. Take the time to get to know the other party’s decision-maker on a personal level. Engage in casual conversations and find common ground. Showing empathy and understanding will make it easier to navigate challenging discussions.
5. Communicate effectively (or learn how to win friends and influence people)
Effective communication is at the heart of successful contract negotiation. It involves expressing your ideas clearly and persuasively while actively listening to the other party. Here are some key communication tips to keep in mind.
Use clear and concise language
Avoid jargon and complex terminology that may confuse or alienate the other party. Choose words that are easy to understand and convey your message effectively. Remember, you’re all human, and a little banter goes a long way.
Focus on the benefits
When presenting your proposals or arguments, highlight the benefits for both parties. Emphasize how the agreement can address the needs and interests of each side.
Maintain a respectful tone and avoid confrontational language. Respectful communication encourages cooperation and collaboration, leading to more productive negotiations. Being respectful doesn’t mean you have to be boring—it’s almost always a good idea to bring some humor to the boardroom table.
Pay attention to non-verbal communication
Regulate your body language, facial expressions, and tone of voice. Project confidence, maintain eye contact, and use gestures that convey openness and receptiveness.
Engage in a back-and-forth dialogue rather than a one-sided monologue. Encourage the other party to share their thoughts and ideas, and respond thoughtfully and constructively.
It’s essential to strike a balance between assertiveness and flexibility.
The key takeaways
Successful contract negotiation in 2023 requires a combination of preparation, active listening, creative problem-solving, empathy, and effective communication. It isn’t about winning at all costs but finding reciprocal solutions that benefit both parties.
Approach negotiations with an open mind and a willingness to explore innovative possibilities. Once you’ve successfully negotiated your contract, remember you’ll still need to manage it.
From one human to another, here’s to the continued success of your business and many more contracts signed on the dotted line moving forward.