Closing a deal is often the focus of a negotiation, but it's not the only positive outcome. In fact, closing a deal under unfavorable conditions can be the worst possible outcome for you and your business. There are many reasons a business may choose to walk away. The terms of a contract may require more out of your business than you can afford, or you could be asked to sacrifice employee stability or brand reputation.
Once a bad deal has become a bad contract, it's much harder to undo the negative consequences. Getting out of a bad deal can cost a company money, time, employees, and future deals if their reputation is affected. That's why it's so essential to know when it's time to leave.
Use Leverage to Negotiate
One of the best ways to evaluate a negotiation is to work out who has the greater leverage in the negotiation. Which party has greater resources, reputation, or strength to bring to the table? More importantly, which side wants the deal more? If the person you're negotiating with has a strong need that you're in a unique position to meet, that gives you the power to work out a better deal.
It's trickier if they seem to have more leverage, but there are still ways you can increase your value and bargaining power. Take time to build trust with the other party and listen carefully to their needs and assumptions and you may find there are benefits you didn't know you could offer to improve the deal. You may also discover they aren't willing to meet your needs properly.
Discover Your BATNA
Sometimes a person you're negotiating with simply isn't willing to make a deal that works for you. This is where it's essential to find your best alternative to a negotiated agreement, or BATNA. Having an outside alternative helps you stay calm and level-headed during a tough negotiation. When a deal falls below what you can expect from your BATNA, you know it's time to walk away. For example, Facebook co-founder Mark Zuckerberg turned down an early offer to buy Facebook because he had plans for the future of his business that the deal wouldn't accommodate.
BATNAs also provide significant leverage. If your negotiation partner knows you're willing to work out a deal with another company or even suspects you might, they're more likely to offer terms you can agree on.
If the negotiations do go well, it's important to provide a well-presented contract. A PDF file merger can ensure your contract looks good and is easy to access. People sometimes overlook presentation when drawing up a contract, but small details like spacing and an attractive layout can make a lasting impression on your business partners.
Closing the Next Deal
The most important thing to remember is that you're not walking into nothing. Abandoning a bad deal on the table leaves you open to better deals, which can improve your business's reputation.
Join your local chamber of commerce to begin making relationships and building a strong reputation that you can bring to your next deal.