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Avoid negotiation traps when making a deal

8/29/2011

When negotiating a contract, there are several fixed and flexible requirements small business owners know they need to achieve through the deal. However, as Barbara Buell notes for the Stanford Graduate School of Business, there are a number of steps to make sure the best deal is made.

The first, and perhaps most critical error, is poor planning heading into the negotiations. Buell says that negotiators who are successful go into a deal knowing their top priorities, their bottom line and when they need to walk away from the table.

But she adds people trying to work out software contracts should also try to determine those needs from the other point of view to determine what proposals might be too much to take.

However, at the same time, she notes that small business owners shouldn't be too quick to cave on the other side's initial demands. Accepting a set price too quickly sets a bad precedent, and may influence the other side to think of raising its prices or tightening its terms of use next time around.