Chamber of Commerce Hawaii represents more than 2,000 organizations including nonprofits and businesses of all sizes that encompass 210,000 employees from a wide variety of industries that are contributing more than $32 billion in revenue to Hawaii’s economy.
Top Warning Signs That Negotiations are Unsuccessful
An unsuccessful contract negotiation is one in which the outcome isn't good for your business. Contract negotiations can fail for many reasons. The key is to spot the signs that things aren't going well, so you can decide whether to continue or exit the negotiation. Be on the lookout for the following four signs that negotiations are unsuccessful.
Failure to Think of the Potential Pitfalls
You often hear how important a positive attitude is for success in business, but viewing contracts through rose-colored glasses can leave you blind to potential pitfalls. For any contract, you need to consider:
Risk of loss. How likely is it that you may lose time, money, or other resources if the deal goes through?
Realities of price. How sure are you about the costs of the project? Is there any possibility you've underestimated them?
Liability concerns. Are you protected if the other company violates government laws and regulations? What kind of insurance will you need to safeguard your interests? Who will be responsible for paying for the coverage? If it's your company, what's the extra cost?
No Understanding of the Process
A lack of understanding of the other party's process can stymie negotiations. Before you get into the details of the negotiation, you need to know the following information about the other party:
How long do they need to make a decision?
Who needs to sign off on the deal, and who will be present at meetings?
What could slow or speed up the process on their end?
What deadlines are they operating under?
If you don't know all the above, you won't have a clear picture of where you stand throughout the process.
Lack of Attention to Detail
Details matter when it comes to contracts. If you give the other party a document full of errors, miscalculations, and loose, easily misconstrued language, you open the door to potential problems. Thoroughly review all documents before you present them. When you're sharing electronically, combine PDFs to prepare the final file. Not only will this make the contract look more professional, but it also eliminates the risk of the other party introducing errors or changes without your knowledge.
Inability to Eliminate Emotion
Failure to close on a deal doesn't always mean negotiations are unsuccessful. Sometimes, turning down a deal is the right choice.
Take a lesson from Tr?n Quí Thanh, the owner of Tân Hi?p Phát Beverage Group, a small family-owned beverage business in Vietnam. He turned down a $2.5 billion buyout offer from Coca-Cola because the terms weren't favorable. Since then, the family has made solid profits and grown a brand they take pride in.
If Thanh had fallen victim to fear or been intimidated by the size of the other company, he might have settled for that offer. When you close on a bad deal because of emotions, you can pay the price in terms of loss of revenue, time, and reputation.
Take Early Steps to Increase Your Chances of Success
Knowing the factors that often lead to unsuccessful negotiations can help you make the right choices throughout the process.
Join your local chamber of commerce to network with other business owners who can inspire your decisions related to contract negotiations and more.