By YEC
Approach negotiation as a problem-solving exercise, rather than a combative discussion.
Negotiating contracts and terms with customers is a critical aspect of any business engagement. Whether you are a freelancer, a small business owner, or work for a large corporation, understanding and implementing effective negotiation strategies is critical to achieving mutually beneficial outcomes.
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To apply best practices in contract negotiations – and to protect your interests, foster productive client relationships and ensure smooth project execution – consider the following advice from members of the team: Council for Young Entrepreneurs.
What is a best practice to keep in mind when negotiating contracts and terms with a client? Why?
1. Ensure open communication
A best practice to keep in mind when negotiating contracts and terms with a client is to communicate openly throughout the negotiation process. Be transparent about expectations, ask questions when necessary, and be willing to compromise when necessary. By working together to find mutually beneficial solutions, both parties can be satisfied with the final outcome. —EddieLou, CodePet
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2. Discuss boundaries beforehand
Determine preset conditions and guidelines. Let the other party know in advance what you should and shouldn’t do, along with the reason for each item. This sets the tone for the rest of the conversation as you are forthright with your non-negotiables. It’s not about making concessions later, but being very transparent about what you need in the beginning. After that you can start actual negotiations. —Firas Kittaneh, Amerisleep mattress
3. Prepare for compromise
One of the most important things to remember is to communicate clearly and be willing to compromise when necessary. This ensures that both parties understand the terms of the agreement and are satisfied with the outcome. In addition, it will create an atmosphere of trust and respect, making it easier for both parties to reach an amicable settlement. —Kristin Kimberly Marquet, Marquet Media, LLC
4. Think about scalability
Consider scalability. For example, ask yourself: Will the terms of the contract allow rapid growth? Is it written to allow for contract changes as the scope expands? When you’re trying to push a deal forward, don’t forget to think about the big picture. —Jack Perkins, CFO hub
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5. Consider your resources
When negotiating contracts and terms with a client, keep in mind not to promise too much. It is important that you carefully assess your current resources, compare them to customer requirements and communicate clearly. This allows the parties to set clear expectations from the start and avoid unforeseen conflicts in the future. —Stephanie Wells, Formidable shapes
6. Approach negotiations with benevolence
What I found helpful is to approach negotiation as a problem-solving exercise, rather than a combative discussion. I don’t want to “win” the negotiation and just get my terms. Rather, I try to find common ground with the other party and find solutions that work for all involved. In the long term, this leads to better results and good relationships with customers. —Syed Balchi, WPB Beginner
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7. Look for the customer’s top priorities
Try to put yourself in the customer’s shoes and understand what matters most to them. They don’t always tell you upfront what their top priorities or redlines are, so it’s helpful to ask. This can help break the ice and speed up negotiations. If for some reason you prefer not to talk about the client’s motivations, use past experiences to make an informed assessment of their priorities. —Andrew Schrage, Money Crashers personal finance
8. Strive for clarity and specificity
An essential best practice when negotiating contracts is to ensure clarity and specificity in terms and conditions. Clearly define the scope of work, deliverables, timelines, terms of payment and any contingencies. This will help avoid possible misunderstandings or disputes in the future. —Jared Weitz, United Capital Source Inc.
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9. If necessary, find an advisor
Recognize when to ask for help and seek advice from an advisor. Negotiations can be challenging and stressful, especially when significant interests are at stake. An advisor brings specialized expertise and a fresh perspective to the negotiating table. They can objectively assess the agreement, navigate the complexities and help you negotiate fair and favorable terms. —Ismael Wrixen, FE International
About the author
Council for Young Entrepreneurs (YEC) is an invite-only organization made up of the world’s most successful young entrepreneurs.
