When it comes to being an entrepreneur, it is imperative that a business owner understand the nature of the contracts in their industry of choice. Contracts arise in various forms throughout the company. You have contracts between the company and its employees. Contracts between the company and vendors. Contracts with clients and customers. The variety of contracts can be quite overwhelming for a small business owner. Thankfully, the internet once again becomes an entrepreneur’s best friend.
While one may go to the post office and pick up plenty of standard contract forms, the world-wide-web contains a boundless supply of draft documents. Purchase or download the appropriate forms for your industry, and keep a folder of these drafts for future use.
When it comes time to negotiate with an employee, you must be aware of the value of the worker you intend to employ. Research the local and national averages for the position in question. Research starting pay and average raise rates. In order to be in control of negotiations, the owner must appear to be completely knowledgeable on the topic. Confidence and education are key. Be fair, and be prepared to defend your fair offer.
When negotiating with potential clients, the stakes for on the negotiation raise even higher. Here, your ability to negotiate directly affects your income. If your bid is low you may secure the contract, but you will lose out on funds and lose your position of power at the bargaining table. One never wants to appear like an ametuer. If your bid is too obviously below market value, the partner’s confidence in you may fail.
Research your competitors. What is the average rate for the service you provide in your area? As a new business you may consider working just barely below these averages in order to attract traffic. While discounts may be a great way to increase traffic for a startup, lowering your value too far will lower your ability to grow, and will substantially affect your general income.
Conversely, if your prices are offensively high — even if this occurs out of ignorance — you will lose your ability to increase traffic flow to your business. It is important to sit down at the negotiating table fully knowledgeable of the contract you have drafted, as well as the average rates of your competitors. When you are knowledgeable about your offer, and knowledgeable about the field, then you are in key position to argue for why your price point is higher or lower than the average, and why that is of great benefit to the client.