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Bidding Budgets: A Collection of Useful Articles On Client Negotiation
Bidding Budgets: A Collection of Useful Articles On Client Negotiation
Compiled by Better Wear a Hat Digital 4110 SE Hawthorne Blvd. , Portland, OR 97215
Not every entrepreneur, small business owner or freelancer is comfortable negotiating. Many
dread the adversarial nature of negotiation. Even so, its difficult (and perhaps impossible) to operate a small business or startup and not negotiate agreements with employees, vendors, customers, and others. And its impossible to work as a freelancer without negotiating agreements with your clients. Ive negotiated with thousands of people (for 13 years as an attorney and for the past four as an entrepreneur and business owner). Here are ten suggestions that I hope will help you negotiate, based on my experience and practice.entrepreneur and business owner). Here are ten suggestions that I hope will help you negotiate, based on my experience and practice.
Career Tools: The Business of Graphic Design: Bidding & Budgeting: Useful Articles
negotiation our next best alternative, we either would have been bogged down in many more weeks of fruitless negotiation, or we would have signed an unfavorable deal despite our bottom line.
2. Prepare
Most negotiations require a great deal of preparation and strategizing before you begin negotiating. Part of the preparation involves identifying your goals and bottom line, as well as your best alternative (see point 1 above). But research is equally important. The more you know about the other side the more options youll have during the negotiation. Youll rarely be able to find much information about the person with whom youre negotiating (although this is becoming easier with the amount of information accessible online). But youll nearly always be able to find tons of information about their company. Among other things, try to determine whats important to the other side and how far they might go to close the deal. You should also understand when something is important to the other side. Finally consider what will happen during the life of the agreement. Negotiate concessions on terms that protect you throughout the life of the agreement (such as early termination provisions without penalty). Example: We nearly always buy computers and equipment from DELL near the end of DELLs fiscal quarter. We do this because we know that DELL, like every other company, wants to meet and exceed their quarterly numbers. Theyre far more likely to offer greater discounts when theyre about to close out their quarter.
3. Never Be Intimidated
Small business owners and young entrepreneurs often get intimidated when negotiating with larger companies. Larger companies know this they tell you they have form agreements and their legal team wont let them negotiate. Most of the time, thats untrue. Once you allow yourself to be intimidated, youll have difficulty getting your needed concessions during the negotiation. Good preparation and a solid Plan B will help you start the negotiation on level ground and your ability to negotiate as equals will help you obtain the necessary concessions to make a deal happen. Example: Whenever buyers post projects on crowdSPRING, we require that their funds be escrowed with us in advance before their project posts. Numerous Fortune 500 companies have questioned this practice because they are used to terms that allow them to pay vendors
Career Tools: The Business of Graphic Design: Bidding & Budgeting: Useful Articles
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60 or more days after the services or goods are provided to them. They do their best to impress us with their complex payment processes and rarely forget to mention that they are a large company and were a tiny startup. They dont intimidate us. We politely explain our policies and practices to them and let them know that we do not make any exceptions on our escrow requirements even for large companies. In every case these large companies find ways to work around their complex payment systems and comply with our requirements.
son, instead of across the table from them. Your body language will reinforce your nonconfrontational message that you want to work together to solve some of the sticking points left in the negotiation.
5. Be Prepared To Walk
Although your goal in the negotiation is usually to obtain agreement on your key terms, there are times when you should walk away instead of negotiating further if the other party isnt yielding. I do this all the time when buying expensive goods like cars and real estate. And more often than not, the other party will contact you again and make enough concessions to bring you back to the negotiating table. Sometimes, I walk because thats part of my strategy going in. If Ive carefully researched the other side and know theyre bluffing about certain key terms that they cant accept, Ill plan to walk in advance. At other times, the decision to walk is prompted by what happens during the negotiation. but I always ALWAYS know my next best alternative (see point 1). Example: When we negotiated our first real estate lease, we had a bottom line price that we were willing to pay. After we successfully negotiated that price, our future landlord surprised us with other costs and fees that added substantially to the per square foot price that we would be paying. They wouldnt budge and we walked out. The landlord called us the next day and offered to stay within our budget. We declined. By then, we decided that we didnt want to deal with a landlord that wasnt sincere with us during our negotiations, and ended up leasing space from someone else whos been open and reasonable throughout our negotiations with him.
Career Tools: The Business of Graphic Design: Bidding & Budgeting: Useful Articles
Example: When we negotiated our contract for internet and IP phone service, we had a few important deal terms (price, reliability, redundancy) and I made those terms very clear in the beginning. I also explained that we werent concerned with what each itemized item cost but we needed to make sure that in the aggregate, we didnt exceed our budget. This allowed the other side to understand not only that I had important interests, but also that they had the flexibility to put together a deal in many different ways convenient to them as long as they met my goals.
7. Listen
Successful negotiators are nearly always exceptional listeners who patiently allow the other side to articulate their arguments, deal points, and reactions. Do your best not to interrupt and when you can, encourage the other side to talk first.
Career Tools: The Business of Graphic Design: Bidding & Budgeting: Useful Articles
Listen carefully when you discuss deal terms and get a feel for whats most important and less important to the other side. Although some people argue that you should try not to make any concessions because doing so will only seem weak I disagree. You should look for areas that are unimportant to you but important to the other side and make concessions on those points. Dont just give up those points outright before you begin but do take note of them and concede them as you negotiate. Example: I often will push hard on one-sided provisions in a contract that seem unreasonable. At some point, I might suggest that we make such provisions reciprocal (so that they would apply to both sides). I dont always care about all of these provisions. Some are absolutely irrelevant to the deal and are there only because the other sides attorney or advisor said that those provisions must be included. in such cases, Ill find ways to concede on the provisions the other side thinks are important (but that are not important to me), and in exchange, will ask for concessions on provision that I truly care about.
Career Tools: The Business of Graphic Design: Bidding & Budgeting: Useful Articles
Career Tools: The Business of Graphic Design: Bidding & Budgeting: Useful Articles