Creating and negotiating business contracts is an important skill in the business world. Keep these tips for creating contracts and developing successful negotiation strategies on hand when you negotiate your next business deal.
Why Business Contracts Are Essential
Every business relationship can benefit from a contract. When working with employees, contractors, partners, or suppliers, putting things in writing is the best way to protect your business. A written contract gives both negotiation partners a better understanding of the relationship. Discussing the terms of the agreement helps you settle disputes beforehand. If things go south down the line, the contract will be there to protect you.
Best Practices for Creating Contracts
Most small businesses don't have in-house legal teams, but it's a good idea to seek legal counsel when drawing up contracts. A business attorney can write contract terms in legally binding language, offering you the highest level of protection.
Keep these tips in mind as you create your contracts:
Rights and obligations. Spell out each party's rights and obligations.
Termination clause. Indicate what each party must do to terminate the contract. What repercussions will they face?
Dispute resolution. What should happen if one or both parties cannot hold up their end of the bargain?
How To Negotiate Business Contracts
Bringing your best negotiation skills to the table will earn you the most favorable terms. You should always:
Deal with the right person. Don't waste time negotiating with the wrong person. Verify you're dealing with the decision-maker(s) upfront.
Come prepared with research. Your bargaining power increases in proportion to your knowledge. Know what you want, what is reasonable to ask for, and what is fair to expect.
Prioritize key objectives. It's unlikely you'll get everything you want. Come to the negotiating table knowing what's most important to you and what you're willing to compromise on.
Understand the other party's motives. Understanding the other party's point of view goes a long way. Find out what's most important to them and seek solutions that give you both what you want.
Keep the agreement confidential. Use non-disclosure agreements to protect information shared in the negotiations and over the course of the contract.
Don't rush negotiations. Give yourself enough time to negotiate the best deal and properly satisfy each party.
Tools for Presenting, Editing, and Modifying Contracts
Most contracts are completed online these days. There are many tools available to help you create, edit, modify, and sign contracts securely over the internet. Companies such as DocHub, PandaDoc, and DocuSign offer contract templates, designing capabilities, and document storage.
Modifying and boilerplating contracts is easy if you use a free tool to extract PDF pages. You can use sections of a current business contract in a new contract by selecting the relevant pages you need and popping them into a second PDF.
Protect Your Business With Contracts
Improving your contract negotiation skills will help you get better deals and protect your business. With today's plethora of software options, creating and modifying official contracts is easier than ever.
To connect with other small business owners and share strategies for understanding, creating, and negotiating business contracts, consider joining your local chamber of commerce.