The art of negotiating contracts and terms with clients is a skill that can significantly impact the success and sustainability of your business. From startups to established corporations, the ability to navigate these negotiations with strategy and poise is vital. Whether you’re a seasoned entrepreneur or a budding professional, understanding and implementing effective negotiation strategies can be the linchpin for success in engaging clients.
Below, 20 Forbes Business Council members share best practices businesses should consider when entering into contractual agreements with clients. They explain why this practice holds such critical importance in fostering long-term relationships, mitigating risks and ensuring mutual satisfaction for businesses and clients alike.
1. Be Patient
Patience and understanding are key when negotiating terms. In the ever-evolving ingredients innovation space, scientific thinking and paced logic have done my business and countless others in the industry well. Financial and business decisions should be made with equal gravitas. Therefore, enabling time and space for clients to make such decisions by being patient is imperative. – Chris Gerlach, Synergy Life Science
2. Communicate Clearly
What I find to be most important is clarity of communication. It matters most when you’re negotiating contracts with a client, and it’s crucial for many reasons. For example, it ensures that both parties fully understand the terms and conditions for a reliable and long-term collaboration. Also, clear communication allows for efficient management of client expectations. – Gaurav Kumar, Beyond Codes Inc.
3. Use Easy-To-Understand Language
To secure a fair contract, ensure the language and terms remain easy to understand. This approach allows you to concentrate on your objectives and bottom line rather than struggling to decipher convoluted wording. Remember that if the contract doesn’t align with your company’s best interests, you have the option to walk away. – Francisco Ramirez, The ACE Group (TAG)
4. Plan For The Unexpected
When negotiating contracts, always create contracts for the unthinkable. Most contracts cover best-case scenarios, but it’s crucial to plan for unexpected delays, scope changes or disputes. Addressing these upfront builds trust and prepares both parties for hiccups. Planning for the worst creates a resilient contract that better handles business complexities. – Sevana Petrosian, SEV
5. Understand The Client’s Needs And Values
One key practice in contract negotiations is understanding your client’s needs and values. Encourage them to reveal their objectives. Listening actively to their concerns and priorities is essential for a successful negotiation. – Eran Mizrahi, ingredient brothers
6. Be Specific
One best practice when negotiating contracts and terms with a client is to be clear and specific in your contract language and terms. Contracts should be fair and reasonable for both parties, as well as clear and specific to reduce the potential of disputes. When expectations are well-defined, it’s easier to measure performance and address issues if either party fails to meet their commitments. – Matthew Davis, GDI Insurance Agency, Inc.
7. Get Everything In Writing
Ensure that everything is in writing to leave no room for misunderstandings. This is important because written agreements provide clarity, protect both parties and serve as a reference in case of disputes. This builds trust and professionalism on both sides. – Pavel Stepanov, Virtudesk
8. Assess The Competitive Landscape
Having a clear understanding of your competitive landscape is a key factor in contract negotiations. For many products and services, the decision a client makes is not “if” but rather “who.” It’s important to make sure your sales teams have updated SWOT analyses of the competition so they can lean into differentiators and customize pricing as needed. – Arthur Bretschneider, Seniorly, Inc.
9. Clearly Outline All Contract Points
I live and die by clarity and specificity in my contracts. We clearly outline project scope, deadlines, fees and expectations to avoid misunderstandings and disputes down the line. If the client has a question, we make sure to clarify it in writing. This practice sets clear boundaries, protecting both our agency and our clients and preventing potential conflicts. – Emily Reynolds Bergh, R Public Relations Firm
10. Show Empathy
It’s all about restoring the value of the service you are offering and explaining the rationale behind these terms. Avoid excessive concessions, as these terms are there to protect your business and help clients appreciate the service’s value. Showing empathy is crucial when negotiating contracts to convey your genuine commitment to a long-term partnership. – Raquel Gomes, Stafi
11. Be Transparent
Transparency along with the willingness to adjust positions to ensure a win-win for both parties is one of the most important key practices during negotiations. Transparency communicates the constraints and boundaries you as a vendor are functioning within and your willingness to adjust positions showcases your commitment to delivering value. – Sameer Zaveri, Datamotive.io
12. Define The Scope Of Work
Clearly defining the scope of work includes outlining specific deliverables, timelines and responsibilities for both parties. A well-defined scope prevents “scope creep,” where clients expect more than initially agreed upon, potentially leading to conflict and overworked teams. This practice is crucial for setting realistic expectations and minimizing misunderstandings. – Jeff Pedowitz, The Pedowitz Group
13. Focus On Interests, Not Positions
The one best practice to keep in mind when negotiating contracts and terms with the client is to focus on interests, not positions. Sometimes, differences in terms or price and saying “no” unlocks opportunity. Focus on what the long-term interests are for both parties and don’t get bogged down on a position such as who might be a third-party processor. Dovetail differences and align interests. – Alexander Chandler, Alexander Advisory Group
14. Document All Terms In Written Contracts
Always document the terms in a clear, written contract. It’s vital for preventing misunderstandings, protecting both parties’ interests and providing a legal framework if disputes arise. It also ensures a smoother and more trustworthy business relationship. – Trey Ferro, Spot Pet Insurance
15. Set Clear Expectations
Be clear about what you expect and what the client also expects. This will help to avoid confusion and help you and your client to work well together. If things are unclear, it can cause problems later. This simply means clarity is key for a good agreement. – Salvador Ordorica, The Spanish Group LLC
16. Avoid Letting Emotions Get In The Way
Avoid letting emotions get in the way of a win-win outcome. Business negotiations are just that—business. Start with clear and concise terms that everyone understands, focus on the facts and don’t complicate the process with personal feelings like “I think” or “I feel.” Be aware of your feelings going in and stay in the present to move forward without baggage. – Adam Povlitz, Anago Cleaning Systems
17. Consider Your Client’s Perspective When Negotiating
It’s critical to negotiate deals from both your perspective and the perspective of your client partner. Negotiating a one-sided deal rarely produces a long-lasting successful win, even if you get what you want. Instead, figure out a win-win for everyone involved and explain that what you are proposing has been carefully considered from both viewpoints. This is the way to start a new relationship. – Michael Schultz, Infuse Hospitality
18. Ensure Mutual Understanding
One best practice when negotiating contracts is to always ensure clarity and mutual understanding. This means all terms, expectations and deliverables are explicitly stated and agreed upon. This practice is vital to prevent future disputes and ensure a smooth, transparent working relationship between all parties involved. – Dustin Lemick, BriteCo
19. Account For Risks
When negotiating contracts and terms, oftentimes risk and compliance are not given enough consideration. Everyone normally enters an agreement with the best of intentions, however, over time, priorities and situations often change. A good contract should clearly detail the expectations but also have the language to account for what happens when things don’t work correctly or don’t work out at all. – Jason Foodman, Leaf.page
20. Add Value To The Contract
When negotiating a contract, make sure the client feels like the value they are gaining is more than they are spending. This is highly important because when clients feel like they are not gaining much value, they tend to let the contract sit in their inbox and you never get the sale or outcome you’re looking for. – Joseph Kimbrough, Apex Real Estate Investments
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