The contracts relied upon by your business can make or break your success. They can secure advantageous supply chains, finalize client obligations, and even help you keep your talent. While it may seem like the nuts and bolts of these agreements can be chalked up to boilerplate language, taking that approach is dangerous.
After all, it could put you and your business at a financial disadvantage in the not-too-distant future.
Mistakes to avoid when negotiating a contract
To avoid being put at a disadvantage, you should carefully negotiate each of your contracts. This can be a tricky process, especially considering the number of mistakes that can be made along the way, any one of which can render the contract void or voidable, or that could leave you with less than you expected from the bargaining process.
With that in mind, let’s look at some of the biggest mistakes made during contract negotiations so that you know what you need to avoid.
- Inadequately preparing for negotiations: All too often, businesses sit down at the negotiation table without having thought through their position and their negotiation strategy. This is a big mistake, as it can lead to a rushed agreement that fails to take into consideration key possibilities that can negatively impact your business. Therefore, before heading into contract negotiations, you need to know what you have to have, what you want to gain, and other alternatives that might be at your disposal if you can’t get the agreement that you want.
- Allowing yourself to be pressured into an agreement: Some businesses that negotiate contracts turn up the heat in hopes of convincing the other side to quickly accept a proposal. They might say the offer is only good for a short period of time, or that they can’t negotiate on certain key points. Be careful here so that you’re not giving in when you otherwise don’t have to.
- Letting emotions into the room: If you have a pre-existing relationship with the other party to the contract’s negotiation, then it can taint your view of the process. Brining anger and frustration into the negotiating room is only going to stall or perhaps even completely derail the process. So, try to clear your head and center yourself before negotiating with a conflictual party.
- Focusing too much on competing: Too many businesses view the contract negotiation process as a battle that must be won or lost. In reality, you should view contract negotiations as an opportunity to collaborate and support each other in a new endeavor. By doing so, you can create more value, obtain more favorable terms, and develop a business relationship that’s more likely to stand the test of time.
- Failing to have the right people in the room: If you’re negotiating a contract, you have to have decision-makers in the room. If they’re not there, then you’re wasting your time. So before heading into negotiations, make sure you understand who is going to be present for those talks.
Are you prepared for your contract negotiations?
Strong, effective contract negotiations can put you and your business on the road to success. But if you’re unprepared, then you’re creating a lot of unnecessary risk. Don’t do that. Prepare yourself for the process and be ready to advocate for what your business needs and deserves. That way you can walk away from your contract negotiations knowing that you did everything you can to achieve the best outcome possible.