Negotiate for resultsBy Nina Kaufman, Esq.
When you really think about it, negotiating isn’t that hard.
It’s simply a process where each side wants to get as much as possible from the other at the least possible cost.
Which is something many business owners claim they do well.
Even though many can establish a good rapport, few have a system for handling negotiations. They wing it. That makes it difficult to tell if you’ve gotten the best terms.
Whether you’re taking on bigger clients, securing a new vendor, or expanding your team, we both know how important it is not to give away the store.
That’s something my client Renee was worried about. She heads a graphic design and marketing strategy firm that was in the running for a big branding deal with a major leisurewear company.
She said, I’m super-excited about landing a big client, but I don’t want to go broke serving them. How can I prepare so I don’t get screwed on the deal?
Lots of business owners run blindly into deals with bigger companies for the prestige, the ego gratification, the promise of big dollar signs … only to burn through their profit margin and end up in the red.
That ever happened to you? Ouch.
The key to avoiding those risks is preparation.
That’s what I did with Renee.
Together, we looked at a variety of factors and questions:
- Sweet spot. What kind of businesses do you serve best? Are you familiar with their niche?
- Expertise. Do you have the talent on board to do the work profitably?
- Time. How will this client workload affect your other client deadlines?
- Culture. How does the client make decisions? Can they follow direction?
- Profitability. What’s the least you can afford to charge and still be profitable?
- Payments. When do you get paid? How long to do you have to wait?
- Power. What kind of bargaining power or leverage do you have? Do you have a champion within your client’s organization?
- News. Have your clients been in the news lately? What’s the upshot of the stories?
- Ratings. Which issues are deal breakers for you? Which are giveaways?
The end result: Renee chose not to take the deal. Not enough profit for the extra staff she’d need to onboard. The client changed team personnel mid-negotiations, who in turn changed priorities. Plus, there were rumors of the company’s financial instability.
Is this a success? You betcha … when Renee found out the company eventually filed for bankruptcy.
And now, Renee has a clear sense of her risk tolerance, and how to handle future negotiations.
Have questions about working with Kaufman Business Law? This is the video to watch.