Negotiation and Vendor Contracts By: Robert Rutkowski, Esquire Weltman, Weinberg & Reis Co., L.P.A. Managers frequently negotiate with their vendors, employees, and even other competitors on a variety of issues.  It’s really a two-step process that includes the negotiation itself and the reduction of the deal to a written contract. It’s important to understand basic negotiation theory before sitting down with the vendor.  Think carefully about what you really want and remember that money is often a means not an end.  Set an optimistic but justifiable target.  Be specific in your goals and become committed to them.  Write down your goals and share them with someone else so that you carry your goals with you into the negotiation.  Try to anticipate the arguments the other side will make in the negotiation process.  At the same time, anticipate the counter arguments the other side will make to your points.  Try to build a working relationship across the table with the other negotiator.  Avoid reciprocity and relationship traps such as trusting too quickly or letting others make you feel guilty.  Be reliable, trustworthy and fair to those who are fair to you but when treated unfairly, let the other side know about it.  Always negotiate with the person who will make the ultimate decision, not an agent of that person.  If you can identify the other parties’ interest, you will be that much further along in realizing your goals.  Identify your leverage early on.  Who has the most to lose from the deal?  For whom is time a factor?  If you improve your alternatives or make the other parties’ alternatives worse, or gain control over something the other party needs, you will have leverage and can be tougher in making your case.  Find your own bargaining style, whether it be competitive, problem-solving, compromising, accommodating or a combination thereof.  Do not try to effect a style; do what comes naturally.  No matter what approach you take, it is important to keep your emotional distance.  Pause before making a concession and pause when the other side puts you under pressure.  Deal with discouragement by being patient and always stay in control during a meeting.  Active listening during the negotiation process is as important as your arguments themselves.  If you can avoid preconceptions and understand the perspective of the person negotiating with you, then you will be able to bring your issues to bear much more effectively.  Plan your questions for the other side in advance and ask them with a purpose.  Tailor the questions to your listener and keep the questions short and clear.  Do not interrupt the other negotiator when they are responding to your questions as they may give you valuable information.  Avoid using threats in negotiation, raising your voice or omitting details.  Maintaining good eye contact, smiling and displaying an obvious interest in the discussion is far more effective.  You can, however, walk away from a deal that is not good for you.  Avoid committing to positions that restrict further movement in the negotiation.  Set your limits and stick to them.  Develop a specific alternative as a fallback if the negotiation fails.  People will try to put pressure on you by emphasizing the time element of the negotiation or encouraging you to split the difference when you have more to lose than they do.  The final goal in closing the deal is to get an enforceable contract.  The contract should identify, among other things, what you’re getting, what you’re paying for, that which you are purchasing, how long the contract will be in effect and who the parties are to the contract.  Along with the contract, however, you want to gain commitment from the other side that they will do everything that they have said they will do.  Publicly announce your deal if it is newsworthy.  Have a closing where there is a simultaneous exchange.  Negotiation is a situation where the person with the most information gets the best deal.  Preparation for a negotiation is work and you must allow time for interviewing, fact-finding and strategic thinking.  By treating the negotiation process seriously, you will become an effective dealmaker. To read the entire article click here.