As Consultants and Entrepreneurs we are always faced with the job of negotiating with a Client over one business or the other. Sometimes we win big and sometimes we lose big but in all, it has always had a contribution on how successful we are or will become.
Wisdom should teach you that “you must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.” – J. Paul Getty
It is unfortunate most young Entrepreneurs has never thought of negotiating a contract. I guess that’s why most of them hardly develop a Business Plan before starting up a business. But in this article today, I will show you simple tips to help you negotiate well and as well land more contract.
Learning how to negotiate a contract helps you avoid regret in time to come. If I knew this before now, my former boss wouldn’t have denied me my two years leave allowance and my 5 months salaries he waved off. I had those ugly experiences because I never knew what it was to negotiate a job contract. Good negotiation gives you value both in cash and in kind.
In order to negotiate well, you must be able to answer the following questions correctly:
1. What is the monetary value for your products and services? And what proof do you have to defend your claim?
2. What is the lowest price you will accept? And why?
3. What if nobody accepts to have your products/services at your quoted price? Can you be flexible?
For you to make the best of every negotiation do not let the next person you are negotiating with know that you are impatient, desperate and have hidden interest. Pretend as if you don’t need it and that will help you price moderately if you are buying from a supplier.
In one of William A. Cohen’s advice on contract negotiation, he said the following;
(a). Do more than review your facts. Know the areas in which you can afford to be flexible and where you stand fast.
(b). Know the price for your services below which you cannot go.
(c). Know the areas in which you can speed things up and complete your tasks earlier and where you cannot.
(d). Write down your specific negotiating objectives. That way you won’t forget them in the heat of negotiation.
Warning: Never believe a statement made by someone you are negotiating with unless you can confirm it or test it.
5 Negotiation Tactics
1. Make big demands at the beginning. That will give you more room to negotiate.
2. If you have several competitors, let them know you are negotiating with them at the same time.
3. Be patient. An act of impatient shows that you are desperate and thus have an undisclosed agenda.
4. Be human. Be flexible so that you don’t burn the relationship bridge after landing the first contract.
5. Let someone you trust read-proof your proposal if it should be in paper form before sending.
Final warning: Never tell anybody how you outsmarted someone in the past at the negotiation desk. An attempt to boast on this could be another fast track in digging your business grave. From what I learnt about Donald Trump, he sold Merv Griffin a casino for hundreds of millions of dollars, Donald was believed to have gone on air to blow how he had taken Griffin to the cleaners. And we all knew what happened of how Donald Trump went bankrupt then.
“Don’t bargain yourself down before you get to the table.”
~ Carol Frohlinger
Are there other information you think should be added on how Entrepreneurs should be guided during negotiating a contract? Just leave a comment for me below.