According to Earl Nightingale, famous author and broadcaster “You can measure opportunity with the same yardstick that measures the risk involved. They go together”. He continues, “Wherever there is danger, there lurks opportunity; whenever there is opportunity, there lurks danger. The two are inseparable”.
In many cases, especially with smaller business, (start-up or SME) negotiating with larger organisations, there lives both an opportunity and danger. There is of course an ‘inequality’ in bargaining power. This equality is generally apparent during negotiations. Most large organisations have legal departments and it’s not uncommon for a small company to be pitched into a negotiation involving a corporate legal department.
It’s during these situations that larger organisations may question or request your Terms and Conditions and subsequently changes to your contract or certain clauses omitted. In certain circumstances, company contracts are compared and each clause examined individually; this is commonly known as the ‘battle of forms’. Experienced businesses use Terms and Conditions to position themselves professionally with potential clients and outline how they want to do business; for example getting paid, liability, protecting their IP etc. A well-drafted contract will also help the business manage risk and ultimately save money by avoiding unnecessary disputes.
The following 5 points are worth remembering before you enter into negotiations;
1/ If you don’t have a set of Terms and Condition, then its leads to the smaller company inevitably following the only contract available, that’s the contract of the larger organisation.
2/ Smaller businesses can readdress the balance when negotiating with a larger player; its how you ask that counts and having Terms and Conditions gives the SME an advantage.
3/ Such negotiations can be tense and feel overwhelming, a company with a niche product or service can be in a powerful bargaining position and not realise it, distracted by events or potential size of the opportunity.
4/ Don’t feel flattered; you will end up working harder for less and obtain less appreciation for doing so, vanity costs money!
5/ Be confident, it’s ok to feel pressured by a larger company’s demands. However the same rules apply when doing business with smaller businesses, if you have the capability to deliver services, it’s profitable for you and the risk and scope can be managed then it’s worth negotiating or perhaps in certain cases worth walking away.