As an independent professional, one of the most essential skills you can develop is the ability to negotiate business deals. If handled correctly, negotiations can solidify client relationships, set your project up for success, and help you grow your business. If handled incorrectly, you may compromise on something that is ultimately bad for your business, fail to protect yourself from a legal standpoint, or settle for less than your services are worth.
Follow these five steps to successfully navigate your next contract negotiation.
1. Do Your Research
Preparation is essential before going into any sort of negotiation. Start by funding out as much as you can about the company or client on the other side of the table. Not just the basics about what they do, but also important details like their current financial situation, their past performance, and even current trends in their industry and if and how they are responding. The more you know about their position, the stronger you can make your own case.
In addition, be sure to research your own position as well. Study the market, do the math, and take a look at similar industry offerings. Be prepared to discuss the reasons your services are priced the way they are and the value you bring to the table. This way, you can justify your services and cost with hard facts and statistics.
2. Have a Strategy, but Be Flexible
While it’s critical to walk into a negotiation with a plan already in place, it’s just as important to remain flexible during discussions. Remember to keep your main objective and goals top of mind, but at the same time be aware of what you’re willing to give up in order to make a deal.
3. Aim for a Win-Win Outcome
Negotiations are often thought of as win-lose situations in which one side gets what they want while the other eventually caves. However, the ideal outcome to any negotiation is one where both sides emerge happy and satisfied that they’ve reached a beneficial compromise. Listen carefully to the client’s requests and try to accommodate them as much as possible without compromising your own needs.
4. Think Before Acting
There’s a lot to think about and keep straight during a negotiation, so keep in mind that relying on your first instinctual response probably isn’t a good idea. Trusting your gut and making a quick decision based on emotions may lead to an agreement that you’ll regret soon after. Instead, take time to carefully deliberate and gather your thoughts before deciding or responding to a question, even if it is in the middle of a fast-paced conversation.
5. Know When to Say No
Not all negotiations end in ideal compromise. Don’t be afraid to walk if the negotiation doesn’t seem to be moving in a favorable direction. Just because you close the door on this particular deal doesn’t mean you’ve shut yourself off from all future possibilities.
Accepting a deal that isn’t beneficial to your business does more harm in the long run than walking away now. Ending negotiations on a friendly note, even if you’re unable to reach an agreement, can leave the door wide open for future negotiations and a more favorable position the next time around.
While negotiating isn’t the most glamorous part of running a small business, it can create a strong base for a client relationship and help set your project up for success. The more you negotiate, the more you’ll learn what tactics work best for you and the more comfortable you’ll become with standing up for your requirements and finding an ideal compromise.