Negotiation strategy is a learned skill. This is Part 2 of a 10 part series on the Art of Negotiating Contracts within the Cannabis, Hemp, and CBD Marketplace, published every Friday.
Negotiation strategy is developed prior to your first meeting.
Know your numbers and your bottom line. Prepare a spreadsheet to determine your lowest price point. If necessary are you comfortable with accepting the lowest price point?
Analyze the long term benefits of entering into a contract at your lowest price point.
Does the contract contain an option to renegotiate at a later date?
Is there growth potential?
Does the other company offer an opportunity for marketing exposure and market positioning for your products or services? If you are negotiating with a major chain to carry your product, consider the brand exposure this offers. How does that affect your current marketing budget?
Is your company capable of handling an increase in production or service demands?
Negotiation strategy involves more than price points. There are other aspects of the contract you can leverage, such as shipping costs and fulfillment schedules.
What concessions are you willing to make? What are the real costs of the concessions?
The first contract you receive is just that – the First.
Enter into the negotiation with your ideal contract. Be prepared with alternatives.
One strategy recommended by some negotiation trainers is to present all your alternatives in the beginning. I do not endorse this. By giving them options you have given away your power and leverage. You have eliminated negotiation and made it a Yes or No situation.
It is important to listen.
Over the course of your business life there will be situations where you are writing and presenting the contracts and situations where you will be presented contracts written by other companies.
Listen to the concerns and comments regarding the contracts. Ask questions to insure that you have clarity. Initiate your negotiation strategy.
Price point too high? Your counter offer: We would consider paying shipping to your distribution center which would offset your price by………..
Their counter offer: Price decrease, no shipping charges. Can you afford to do both – what is your bottom line?
Why is your product or service of value?
This is the point where you justify your asking price. You will need to know how your product or service compares to your competitors. Better quality is not a complete answer.
If your products or services appear equal to your competitors, emphasize your business reputation, superior customer service, guaranteed ship dates, etc. Your brand recognition and marketing strategy can also make you more desirable than your competitor.
At this point negotiation strategy sounds relatively simple. Negotiating is basically common sense, preparation, and communication.
What can make negotiations challenging are the personalities involved, their negotiating techniques and how you adjust and adapt your approach in order to achieve a Win-Win contract.
We will cover each negotiation style and technique in upcoming segments.
Addison Morris has been a serial entrepreneur since 1968. Addison believes that in the politically charged, competitive cannabis, hemp, and cbd marketplace, business principles and best practices are a crucial element for success. She speaks and teaches marketing, and negotiation skills. Her goal is to move women from empowerment into power through business education, resources and connections. Addison is the founder of the Women’s Cannabis Chamber of Commerce.