How to Prepare for Contract Negotiation?
Updated: Oct 28, 2021
Contract negotiation is more than reaching an agreement. It can protect your business overtime and clarify terms and responsibilities among parties. Contract negotiation must be done strategically in order for your business to reap the maximum amount of benefits. In this article, we share 5 steps to prepare for contract negotiation.
1. Take time to read over your contract.
How can you really redetermine certain terms over your contract if you haven’t actually read it? You will need to go over your contract to understand what each term implies among each party involved. This may result in you looking over your contract multiple times but you will have to be able to explain in detail why your business is worthy of the term being redetermined.
2. Seek out professional advice.
Even if you have a thorough understanding of your contract, it is always helpful to get a second insight into potential terms you may have overlooked. Great examples may be a lawyer or a business consulting firm. We, at the Watts Group, provide contract negotiation services for our clients and would love to work with you on this matter.
3. Assess any possible objections or risks to your suggestions.
Although, within good reason, the terms you may be looking to negotiate may come with reservations from the other party. Preparing for any possible objection the other party may voice can help you dissect why what you’re proposing is within both parties’ best interest. A simple way to do so is creating a term sheet. These tools are usually helpful to address the biggest and potentially, the most difficult terms of the contracts.
4. Be reasonable.
Even with the best intentions, some things may just not go your way. So it’s ideal to do your research and talk to other industry experts to know what can be expected when negotiating your project. Always try to keep in mind what you’re willing to risk, how much of a benefit you have with building this partnership, and what you are trying to get accomplished.
5. Keep an open line of communication.
Throughout the process, don’t hesitate to keep in contact with the other party. Negotiating your contract doesn’t mean you have to be against each other. It is to ensure that both parties are happy and can come to a fair agreement. Feel free to answer any questions they may have and be transparent about the contract being under review. Efficient communication will tailor a strong, long-lasting partnership.