Despite our best efforts, sometimes we negotiate a bad deal. But is that the end of it? After you acknowledge your mistakes – and face the sinking feeling in your stomach – you can begin to seek opportunities for renegotiation. Here’s how to find more favorable terms.
Before A Deal Breaks Down
While no one wants to be involved in a deal gone bad, you can protect yourself before negotiations even begin by doing the following:
- Building strong relationships. If the other party trusts you to consistently deliver what you promise, they are will be more likely to be flexible if you need to make changes.
- Doing your research. Take the time to explore all related information to make it less likely your deal will be affected by unforeseen circumstances.
- Writing nrenegotiation into contracts. Cover foreseeable circumstances in your contract and provide for a renegotiation process for specific events.
Understand What Triggers Renegotiation
Both buyers and sellers can reasonably expect to revisit terms when a contract is imperfect or the circumstances surrounding the deal change. Most buyers realize that even if you’ve signed a contract, no one can predict everything that can impact the transaction. For instance, if materials prices suddenly skyrocket, new technology makes your current offering obsolete, or a spike in energy costs dramatically increases production requirements, sometimes both parties must either walk away from the deal or come to new terms.
Ask if You Can Afford to Lose
Successful renegotiation often results only when negotiators speak from a position of strength. If you can’t afford to lose the deal if you’re unsuccessful in renegotiating it, your fear could very well undermine your confidence and even damage your credibility.
If you realize it would be better to lose the deal than honor the current terms, openly address the situation with the buyer and let them know you’re not happy with the terms to which you agreed. Ask if they’re willing to look at the numbers again and find a mutually beneficial solution.
When a deal goes bad, both sides feel stress, which can create hostility. If you become angry or defensive, your emotions will work against you. To guard against that possibility, look for ways to create value for the other side and create a problem-solving atmosphere. Invite everyone who participated in the original agreement to help find a solution. If meetings continue to be stressful and unproductive consider hiring a mediator to manage the process.