Perhaps you are about to enter negotiations that could win you rights to an innovative product your up-and-coming company wants to sell.
However, you do not have much experience with important contract negotiations. Here are five tips to boost your confidence and help you close the deal.
1. Know what you will gain
Be clear on what you stand to get out of the agreement. For example, will your company have exclusive rights to this new product? How long will the contract you want remain in force? What are you willing to give up in the negotiations?
2. Use a term sheet
When you are going into the initial stage of the contract negotiations, be prepared with a list of the terms you want.
3. Be reasonable
Do your research. Speak with industry experts and consult people who would be dealing directly with the new product, such as your sales and marketing managers. Know what to expect in terms of promoting and selling the new product so you can approach the negotiations in a reasonable manner.
4. Put the first agreement in perspective
Take your time. There will likely be more than one stage to the negotiations. View the initial agreement as just the starting point. Look it over and ask questions about anything you do not understand. Ask for clarification and for discussion if you do not agree with some of the terms. Your legal counsel can alter the language in line with your preferences if the other side has no objection.
5. Keep your composure
Negotiating a contract can be an emotional undertaking but resolve to keep your composure. Take a good attitude to the table and retain your sense of humor, even when there are sticking points to resolve.
Why a contract matters
Normally, the ultimate reason for having a business contract is to permit one side or the other to enforce its rights if there is ever a need to go to court. If you are able to negotiate successfully, you will avoid many of the pitfalls that could surface because of a poorly drafted contract.