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Knowing What To Give Up Can Get You What You Want

Before sitting at the negotiations table, you should know your priorities and what can be given up. Many times, knowing what you can give means getting what you want.

Predefine Your Priorities 

Predefine your priorities before entering negotiations. Knowing what you want will make the process smoother and ensure you receive a profitable deal. Create a list of your priorities and rank them according to importance. Use an asterisk or another marking to denote which priorities are nonnegotiable. These will be the first few items on your ranked list. While these items are primarily nonnegotiable, there will likely be room for slight negotiations above your minimums. 

Calculate Your Minimums 

Your minimums are the lowest amounts you can accept for the business deal to remain profitable. You should calculate your minimums for each of your top priorities from your ranked list. As mentioned earlier, these first few items will be primarily nonnegotiable. You'll have to receive specific amounts for the deal to be profitable. Still, you'll likely have a little haggling room above your predefined minimums.

When determining your minimums, you must look at all cost factors. For example, let's say you're determining the minimum order amount per delivery period. For this example, you can assume the goods are delivered personally by a company truck.

To get an accurate minimum, you'll need to include:

  • Price per product

  • Number of products ordered

  • Gas costs to and from the other business

  • Wage costs for the employee(s) driving, loading, and unloading the vehicle

  • A fraction of the total insurance costs (may include car, liability, and workman's comp insurances)

  • A small additional percentage to allow your company a profit (determined according to your business model)

Know What You Can Give Up 

You must make compromises during the negotiations process. These compromises usually require one party (or both parties) to make a concession. A concession is when something is given up to achieve the desired outcome. While you should avoid making the first significant concession during negotiations, you must evaluate what you can give up ahead of time. Once you've determined what you can give up to achieve your priorities, you can determine acceptable alternatives.

Determine Acceptable Alternatives 

Ask yourself what acceptable alternatives there are to your priorities and negotiables. For example, you may be willing to give up vendor exclusivity if the other party is willing to have a higher order minimum. Or, you may be willing to trade your order minimum for a lower amount if the price per product is agreed to be slightly higher. Create a few alternative situations you find acceptable as your backup plans. 

Create an Appealing Contract 

The way your contract looks is essential. A sloppy and unorganized contract can end a deal before negotiations have begun. Take your time to create an appealing, detailed, and organized contract. An easy PDF compressor can help make a visually-appealing contract that is also an accessible file size. 

Know What You Can Give Up so You Can Get What You Want

Compromises must be made during contract negotiations. You must know what you can give up before sitting down to negotiations so you can get what you want.

For more valuable business resources, join your local chamber of commerce.  

 

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