Contract Negotiation 101 for Small Businesses
Negotiating a contract is something that many small business owners don’t have a lot of experience or background in doing. Unfortunately, it’s something that many people need to do during the course of owning a business, and a lack of background can result in making critical errors that can cost your business thousands or tens of thousands of dollars. Here’s what every small business owner should know about negotiating a contract:
Expect the Other Party to Have a Lawyer
Even if you’re a small business entering into a contract with another small business, you must always assume the other party is working with a lawyer to structure the contract in the most advantageous manner - for them. You’re entering into a very uneven negotiation when the other party has a lawyer and you don’t. You need to be careful about all of the language in the contract when the other party is working with a lawyer, and it’s vital to work with your own lawyer to ensure you’re not being taken advantage of.
You Need Someone Objective to Do Your Negotiating
It’s always helpful to have someone objective negotiating on your behalf. It’s easy to get caught up in the emotions of contract negotiation, or for competitive individuals to end up focusing on the desire to “win” the negotiation. With an objective party handling your negotiating, that party can focus on your real needs, and getting a contract that works for you. Having a third party involved can also avoid tipping your hand - if you’re negotiating directly, you might accidentally use language or even a tone of voice that reveals your ultimate strategy. When a third party is doing your negotiating, though, you don’t have to worry about inadvertently revealing your plan.
Make Sure the Contract is Structured Properly
What you think you’re agreeing to may not actually be what you’re signing. It’s important to have an attorney on your side to ensure the contract is structured properly. Even if the other party has made a good faith effort to create a mutually-advantageous contract, it could cause problems if it’s missing certain clauses or key language to protect you and your business.