It’s the end of the year, and your small business needs to close this big deal to finish the year in the black. You have a whole team counting on you to get it done, and just to add some pressure, you’re cash is running low and a payroll is right around the corner.
The stress has been getting to you. Today’s bad news has frayed your nerves almost to the breaking point.
Somehow, your customer seems to have caught wind of your situation, and has decided to schedule the final contract negotiation… at 3:00 on the last day of the year.
Who will have the upper hand in this negotiation? Clearly, it’s not you. Your customer has decided to use time to their advantage. It is a difficult situation to be in, and one that you would be wise to avoid at all costs.
The Impact of Time Pressure
Dealing with deadlines and time pressures can cause undue stress, and can also lead to lopsided negotiations and money left on the table. Regardless of whether you are a purchasing agent needing to acquire materials before they run out, a contracts analyst working to help your sales department close a year-end deal, or an executive seeking to seal a merger before nervous shareholders scream too loudly, knowing how to manage time is a critical skill.
Managing time properly not only enables you to avoid excessive pressure, it also enables both parties to weigh situations and consider various options without feeling overly rushed to agree to terms.
In some instances, specific clauses or proposals may require approval from individuals who are not present at the actual negotiation: a C-level executive, Legal, Finance, or in some cases, the Board. Allowing sufficient time for review and approval processes will help accommodate these situations.
Here are three top tips to help you manage time during a negotiation:
Deadlines – When faced with a deadline in a negotiation, ask yourself who controls the deadline. Is the deadline imposed or controlled by you, or by the other party? If it is internally imposed, is it a realistic deadline? If the client has imposed it, is it set in stone? What are the reasons for the deadline? Is it artificial? Is it flexible? Try to gather as much information to determine why a deadline exists and if it can be influenced. If necessary, it never hurts to ask for more time.
Be Willing to Bend on Time – There may be times when the other party may ask you for more time during a negotiation. One of the keys of principled negotiations is to be willing to act in good faith to ensure that a win-win situation and strong relationship will emerge from a negotiation. Providing additional time, within reason, shows the other party that you are open to working with them. Of course, if providing additional time results in an advantage for them or places you at a disadvantage, it may simply be a tactic. Ask a few probing questions to find out why they need more time. Ultimately, you should seek to take actions that ensure a positive outcome for you while also protecting the relationship with the other party.
Don’t Allow Negotiations to Stall – In those instances when the other party requests additional time, or the negotiation is paused or delayed for another reason, be sure to impose a deadline and set up a new negotiation meeting. Don’t let any momentum you have managed to build so far fall by the wayside by allowing a negotiation to stall.
So how did you manage to get out of the above scenario that we stated up front? Fortunately, you knew that this tactic was coming, and you had formulated a response ahead of time. When you finally sat down at the table with this prospect, you stated that you can’t go lower than the price quoted, because you would go under your GSA pricing guarantee. However, you’re prepared to make some other (non-financial) concessions to get the deal done this year. They include immediate shipment of the products, and also escalation of any problems to the second tier of your support. The deal closed, and you saved your company from disaster.
Our thanks to Baker Communications for supplying the role play scenario and tips.