As businesses search for ways to get through the economic downturn, one thing is certain: nothing is certain. In the New York Times Tool Kit, “Nothing is Set in Stone, So Renegotiate,” Paul B. Brown notes that fixed costs may not be as fixed as you think. He says businesses should analyze every contract -- from the company that supplies the water cooler to your neighborhood banker -- and look for places where you can get a cost reduction.
Use these tips from a variety of experts on renegotiating contracts and partnerships:
- Prepare: Be clear on what you want out of the arrangement and research the other side so you understand their needs, strengths and weaknesses. [Source]
- Anticipate Compromise: You probably won’t get everything you ask for, but any concession will leave you in better shape than you are now. [Source]
- Negotiate for Lower Rent: “Tenants frequently have the upper hand in a renegotiation scenario,” write experts at Gaebler.com. “Unless the local commercial real estate market is red hot, landlords are hesitant to risk incurring an extended vacancy period by allowing the space to turn over.”
- Work Together: It’s important to treat your business partners like partners, not adversaries. For instance, in exchange for the concessions you seek, offer something to the other party in return. [Source]
- Your Final Argument: In these challenging times, renegotiating contracts could mean life or death for businesses. Tell your partners that less revenue from you is better than none at all.
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