There’s a popular saying in business: “You don’t get what you deserve; you get what you negotiate.” Nigerian entrepreneurs often find themselves negotiating with customers, suppliers, investors, and prospective employees. However, contract negotiations don’t have to be unpleasant or one-sided. Each party is expected to compromise on some issues to achieve their key objectives.
Typically, contract negotiations consist of two stages: negotiating the basic business terms followed by the legal terms. For instance, in a sales and purchase contract, business terms usually revolve around price, quantity, specifications, delivery period, etc., while legal terms include dispute resolution, governing law, termination, and penalties for breach.
This week, we explore the fundamentals of contract negotiation and offer tips to enhance your success rate.
1. Evaluate Your Bargaining Position
The first step in any negotiation is to understand your bargaining position. What are your expectations? What are you prepared to give? How crucial is the contract to your business? Sometimes, the bargaining power may be skewed in favor of one side. If you’re on the weaker side, you might not gain much from the negotiations. Understanding your position helps you strategize effectively.
2. Seek Professional Help
You might know what you want from the contract but may struggle to document it in a way that protects your interests. Engaging a lawyer in contract negotiations and documentation can be invaluable. They ensure your interests are legally safeguarded.
3. Negotiate with Facts, Not Emotions
Successful negotiations require a rational and objective approach. Avoid letting emotions influence your decisions. Focus on the facts and remain professional, even if the other party’s personality or style is challenging.
4. Keep a Poker Face
Be cautious about revealing too much during negotiations. For example, if you’re overly enthusiastic about a product, the seller may not leave much room for negotiation. The strength of your negotiating position often depends on your alternatives to the deal.
5. Always Read Before You Sign
Many business owners make the mistake of signing documents without thoroughly reading them. Ensure you review the draft contract with your lawyer to confirm all agreed terms are accurately incorporated.
Conclusion
In conclusion, remember that it’s not always in your best interest to dictate all the terms. As the saying goes, “You must never try to make all the money that’s in a deal. Let the other fellow make some money too. If you have a reputation for always taking all the profit, you won’t have many deals.”
By mastering these negotiation tactics, you can significantly improve your outcomes and build stronger, more sustainable business relationships.
