How to Prioritize and Protect Your Company in Every Contract Negotiation
No business owner wants to walk away from negotiations, but sometimes it's the only reasonable solution. You can't always win, and trying too hard to close a sale can lead to unforeseen consequences or unwanted outcomes. Wrongly prioritizing important contract terms can jeopardize your company's chances of moving forward with a lucrative deal, so if you find yourself facing a contract with unfavorable terms, it's best to let the negotiation go.
It's Important to Know When to Walk Away
The process of contract negotiation can be tricky. Both sides have aims they want to achieve, but that doesn't mean they're worth jeopardizing your business. Leave the table if you feel like the conditions aren't right for your business. For example, you might find it's wiser to walk away from a contract negotiation if:
The other party is asking for too much money or equity in your business.
They're asking for unnecessary terms and conditions that reflect your employees negatively.
The contract could harm your company's reputation.
You don't have to submit to every term, and if you disagree with any of the stipulations, it's okay to end negotiations. If you feel the contract is no longer helpful for your business, follow your gut.
Walking Away Can Be the Best Option for Your Company
Review the risks and liabilities of the deal. You can identify these risks by looking at the contract terms. Some of the most common problem areas include:
Extraordinary termination clauses that harm your business
Unilateral modifications that allow changes without the consent of all parties
Compensation loss upon termination
These are just some examples of the terms you should avoid because they could negatively affect your company. Sometimes, it's beneficial to walk away from a contract if the agreement doesn't reflect the ordinary course of business.
Use Clear and Accurate Language When Negotiating
All parties must agree. Miscommunication can lead to unwanted results, so your contract terms should be clear. Using clear language in contract negotiations ensures that there are no surprises later. Also, avoid using confusing or legal jargon that can lead to disputes down the road. If you need to adjust any content before sending over, you can convert PDF to Word to make last minute adjustments.
When Is Risk Acceptable in Contract Negotiations?
Risk acceptance is all about deciding which risks are worth taking. It's crucial to weigh the benefits and liabilities of the contract before you sign on the dotted line, and you might find it's beneficial to walk away from an arrangement that doesn't suit your business.
You can look at it as a spectrum. You have zero on one end, and on the other, you have absolute risk. Sometimes, taking more risks can allow you to gain more, which is why it's important to assess the risk that comes with every contract.
Know Your Priorities and Protect Your Company in Every Negotiation
When deciding to continue a contract negotiation, ensure the terms of the agreement are understood and acceptable to all parties.
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