Deciding Whether to Take the Deal or Walk Away
Closing a deal and coming to an arrangement that works both for your firm and the counterparty should always be your end goal in the negotiation process. But, not every deal is a good one, and sometimes it's more beneficial to walk away.
However, it can be difficult to know when it's the right point to walk away. So, if you're unsure whether it's time to let go of your ongoing contract negotiation, this article can help you.
The Conversation Has Become Unproductive
One sign that it's time to walk away from a deal is if the conversation has become unproductive. An unproductive conversation can take many forms, including:
A vendor who is behaving obnoxiously
Going round in circles over the same points
When the tension starts to build
If you notice any of these indications that the negotiation is no longer constructive, it's probably time to take a break from negotiation meetings or walk away altogether.
An example of a firm that let go of a contract negotiation is BP during its negotiation with Rosneft. BP had to walk away from the deal when the conversation between TNK-BP, a company co-owned by BP, Rosneft and BP became unproductive. Letting go of the contract gave each party the opportunity to reconsider what they wanted out of the negotiation and enabled them to come to an effective conclusion two years later.
The Deal Feels Too Risky
Taking some chances in business is essential, but there's a limit to the number of risks you should take.
The types of risks you should never take during contract negotiation include:
Anything that risks your firm's integrity
The counterparty suggests something against your company's policies
There are huge financial risks involved
The vendor's ethics don't line up with your company
Trusting your gut feeling during negotiation is often underestimated. If you think a deal poses too many risks, it might be the right time to walk away.
Why Deals Fail
Deals fail for so many reasons, and it's not always a bad thing. Even well-planned and well-researched negotiations sometimes fall through due to personality conflicts and misunderstandings.
A lack of preparation
Too much of a focus on "winning"
Negotiating without advice from a wider team
Risks of Accepting a Bad Deal
While it may be tempting to accept a deal despite the conversation becoming unproductive and the threat of moral and financial risks, it's never a good idea.
When you accept a bad deal, the potential negative outcomes include:
Poor reputation in the market
How to Present a Winning Contract
To increase your chances of coming out on top during negotiation, consider how you present your contract. A proposal that is presented in an unprofessional or chaotic way is unlikely to result in success.
So, always make sure you take care to reduce PDF file size to ensure your contract appears polished and streamlined.
Learning When To Walk Away
If you've noticed some of the signs mentioned in the article have cropped up during your negotiation meetings, it might be time to walk away.
For more advice on how to proceed, join your local chamber of commerce today.
This Hot Deal is promoted by Leesburg Area Chamber of Commerce.