It can be tempting to rush into a potential new contract with enthusiasm to try and finalize the deal as soon as possible. However, this is often a bad idea. The excitement that you feel when first looking at an attractive offer can overshadow your calm inner voice of reason and analytical thinking that may pick up potential problems. It's essential to stop and take the time to plan, otherwise you may open yourself up to necessary risks.
Decide on the Process
Having a team to conduct a risk-benefit analysis ensures that you reveal the true value of the deal. Deciding on the process to follow with your negotiating team is key in creating a sound strategy. Each member of the team should be okay with the strategy, and the strengths of each member should be harnessed to create a solid foundation.
Part of creating a seamless negotiating process includes creating a bulletproof contract that covers all eventualities and considers both parties equally. There should be a basic framework laid out that can be amended as required, during the period of negotiation. It's important to convert JPG to PDF online to ensure that your contract is formatted professionally and looks good when presented to the counterparty.
What Are the Desired Outcomes?
Part of the planning stage is to determine the desired outcomes with your team so that everyone is on the same page when you are in the meeting. Bear in mind that you'll have desired outcomes and so will the counterparty. Each party will fight for their desired outcomes, sometimes to the detriment of both. This is where your team needs to be aware of the walk-away or reservation point. Decide at what point your negotiables become unfeasible, and when calling off the negotiation would actually be the best course of action.
What is your Bottom Line? Make sure that everyone in your team knows what the bottom line is, without revealing it to the counterparty.
When is there no longer value on the table? Determine the financial value outcome that you hope to achieve and when proceeding with the deal would become a financial risk.
What is your best alternative to a negotiated agreement? Have a BATNA so that you have other options if the circumstances call for you to walk away. This may involve finding a different partner.
When Is Losing Actually Winning
There are consequences of making a bad deal. This can include poor turnover, decreased market share, problems with employees and stakeholders, distribution and supply chain issues, and unrecoverable losses. In this instance, walking away would have been the best option. If you lose a contract that will cause problems in the future, it's not really losing. You would be saving your company from the potentially disastrous pitfalls associated with a flawed deal.
Learning Opportunities Abound
Learning and networking with your business community is a great way to obtain advice and undercover strategies that you can use in your own business negotiation processes.
A good first step is to join your local chamber of commerce.