9 Ways to Negotiate a Contract Like a Boss
There are things in life that people only learn to do the hard way. Negotiating contracts is one of them.
It’s an emotionally fraught process. I get that! Because I encounter so many people making the same mistakes, I felt compelled to write about it. I’ve been negotiating contracts for decades now. For the past 14 years, I’ve helped inventRight students negotiate
theirs. This is what I’ve learned.
Having a good attitude is the most important asset you can bring to the table, hands down. If you act like you can make it work, you really might be able to. Think about that. When it comes to contracts, the power of positively is real. Likewise, it pays to hold on to your sense of humor, especially when the going gets tough. You have to keep your relationship positive. These are the people you’re going to be working with if the contract ends up being signed. Somehow, people lose sight of that.
If you haven’t had a lot of experiencing negotiating a contract, take the following advice to heart.
Never forget to think about your end game. What are you really after? How much do you want to make this partnership work? What are you willing to give up in return? If someone tries to rush you, that’s a big red flag. These are important considerations -- considerations that may evolve over time. Plot your moves carefully.
It’s an emotionally fraught process. I get that! Because I encounter so many people making the same mistakes, I felt compelled to write about it. I’ve been negotiating contracts for decades now. For the past 14 years, I’ve helped inventRight students negotiate
theirs. This is what I’ve learned.
Having a good attitude is the most important asset you can bring to the table, hands down. If you act like you can make it work, you really might be able to. Think about that. When it comes to contracts, the power of positively is real. Likewise, it pays to hold on to your sense of humor, especially when the going gets tough. You have to keep your relationship positive. These are the people you’re going to be working with if the contract ends up being signed. Somehow, people lose sight of that.
If you haven’t had a lot of experiencing negotiating a contract, take the following advice to heart.
1. Take your time.
In
my experience, contracts that are signed quickly tend to be lousy. Most
people do not enjoy negotiating and just want to get it over with. I
get that, but please, don’t rush. The final product will be much better
for it.
2. Get professional help.
I may know what I want
out of a contract business-wise, but I certainly don’t know how to write
one in such a way that protects my interests. I always have my lawyer
review anything I sign. Don’t get me wrong, I try to do as much as I can
on my own, in part because I enjoy negotiating. I feel pretty confident
about my skills after all these years. But at the end of the day, I
need his help, because I’m not a legal expert.
3. Always start with a term sheet.
Term
sheets address big picture items. I think of this initial stage of the
negotiation process like dating. At this point, everyone should be
happy! Make sure to stick to just the broad strokes at this stage. If
you can’t agree to a term sheet, why bother trying to sign a contract?
It will never work out. Don’t waste your time.
4. Think of negotiating a contract like eating an elephant.
You’ve
got to do it a step at a time. I recommend you start by tackling some
of the easier aspects first. Focus on gaining some momentum. Remember,
the attitude with which you approach the process is crucial. If you get
some things out of the way early on, you’ll both be pleased. Then, later
on, you should bring up the difficult issues. At that point, your
conversation is likely to go more smoothly, because frankly, you’re both
invested! You’ve spent time on the agreement. It will be harder for the
other party to pull out.
5. Do the math.
How
much do you stand to gain? You should have a concrete idea. Ask your
partner for the information you need to help you make a determination.
6. Don’t hesitate to pick up the phone.
We’ve
all received emails that have come across terribly and left us
wondering about the sender’s true intentions. If your communication
seems to be faltering, call the person! Don’t wait for a full-blown
misunderstanding to brew. You’ll get a much better read on the
situation, including when to back off and when to accelerate.
7. Understand that the first contract you receive is just that -- the first.
The
contract you end up with will be very different. Don’t flip out. It’s
needless and unproductive, because it’s just a starting point. Shake it
off. Everything is negotiable. That’s the point. If you don’t understand
something, ask for clarification. If you don’t agree, ask to discuss
the point. Discussing an issue (rather than going back and forth in
print) can help speed up the process. If your partner agrees to let your
attorney insert the language you want into the contract, take full
advantage of that.
8. Consider finding someone to play “bad cop.”
Some
people are uncomfortable asserting what does and doesn’t work for them
point-blank. It can be helpful to have a partner. My wife is my partner.
I consult her before committing to anything. The people I’m negotiating
with this know this. I can tell them that I need to run something by
her first, or say, “This doesn’t work for Janice.” Many companies have
employees play bad cop and good cop, because it works!
9. Be reasonable.
I
mean it. To be reasonable, you need to know what is actually reasonable
-- so do your research. Talk to some industry experts. What can you
expect? Actually listen to what they say.Never forget to think about your end game. What are you really after? How much do you want to make this partnership work? What are you willing to give up in return? If someone tries to rush you, that’s a big red flag. These are important considerations -- considerations that may evolve over time. Plot your moves carefully.
By Stephen Key,, entrepreneur.com, ,Co-Founder of inventRight; Author of One Simple Idea Series
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