Why should we be kind to others?

23 Nov 2020

7 Negotiation tips for SMEs

Do you need some practical negotiation tips for SMEs? Klass Academy works with small and large enterprises and we understand that negotiation is challenging for small businesses.

Negotiating a contract with a big company or the government can be particularly hard. How should small businesses and entrepreneurs handle negotiations?

1. Determine in advance what you want exactly out of the deal to avoid coming out on the short end of the deal, or losing it altogether.

  • How much profit do you want?
  • What’s the minimum price you can agree, and yet make it profitable?
  • What do others get for similar products and services?
  • If intellectual property is involved: copyrights, trademarks, or patents, which right if any, are you willing to concede?
  • How long are you willing to license those rights for?
  • What counter offers can you request if your client is pushing you back?

2. When you get an initial offer, look over it carefully. Don’t be pressured into making any kind of decisions or definitive answers if you are presented with an offer in person, or one is faxed to you while the client is on the phone. Advise the client you will review the offer carefully, and get back to them.

3. Next, always be ready and willing to negotiate. If the customer is a large corporation or a company that regularly buy goods or services through negotiated contracts, the contract you are initially shown is likely to be a standardised contract, or one written by the company’s attorneys to give them the most favourable terms.

  • Don’t assume that the bigger company won’t make changes.
  • Prices and terms are likely to be negotiable. However, only if you negotiate them.
  • The initial price offer may be just that – a first and low price. It was made expecting that no matter what price is offered, you’ll try to bargain.

4. Carefully look at all the terms, not just the price.

  • There may be some terms included that are unacceptable, and some that you don’t like, but you could live with if you had to.
  • Have your attorney look over the offer and alert you to important issues you may have missed
  • Then, go back to the client. Review all the issues you have with the offer, and settle what you can.
  • Focus on the most important issues to you.
  • If the price is too low, try to negotiate the highest price you think the company’s budget will allow.
  • Don’t start near or at your drop-dead minimum.
  • Don’t be too greedy, but have confidence that it’s reasonable to make a fair profit for your work.
  •  And remember: keep your overall objective in mind.

5. When necessary, trade off the less important issues to win concessions on the items that are more important. If you sense that tension starts to increase, then consider to hand-off negotiations to your attorney to distance yourself from the negotiations.

6. Stay in touch with the people from the company you will actually be interacting with, even after the contract is settled. If they recommended you, they may have a strong interest in seeing your contract settled. So, whether they admit to it or not, they are likely to be doing what they can behind the scenes to speed things along.

7. Finally, if the other side insists on unfavourable terms, walk away. Do the same if the conditions won’t help you reach your goal, or they are a major drain on your time, staff productivity and/or business income.

We hope you found useful our negotiation tips for SMEs. In conclusion, preparation can help you negotiate well. Therefore, it’s a good idea to conduct some research on the other party, but also to train before heading into a negotiation. Klass Academy can provide you with proper training, tips and advice to help you achieve a desirable outcome.

To inquire about our courses contact us here. Follow us on LinkedIn to stay up to date with news, articles, offers and more!

Leave a Reply