How to negotiate a contract with confidenceMar 18, 2022
I'm in the middle of a corporate contract negotiation right now, and it's going exactly as you would expect. The other party is trying to get as much from me as possible (for the lowest possible cost), and I'm experiencing all the typical anxiety and blind spots that women tend to have in negotiation. But I haven't let those blind spots get in the way of negotiating my contract - and that's a good thing, because I'm working on saving myself hundreds of dollars by leaning in and negotiating.
Mindset management creates space for negotiation
Although it shifts from day to day, I have three blind spots I am aware of and actively managing.
- I am grateful for the work, because it helps me pay my bills.
- I'm trying not to be too cocky, because I feel like humility is what I need to give off to not be judged.
- And I want to be generous with them, because this contract could lead to something bigger.
That is just a sample of what women entrepreneurs feel in negotiation every day. But there are bigger issues to pay attention to. If I'm not aware of my blind spots, I will focus in the wrong places, costing myself time, reputation, and money.
Mindset management is a HUGE part of negotiation. But I'm actually not going to talk about that today, except to point out that when your mindset isn't focused and aligned to your values, you risk making costly mistakes in your negotiation. So you've got to get your mindset in shape - and knowing the blind spots that you'll face is the foundation for this work. If you want to know more, we cover all the negotiation blind spots that women face in my Fearless Negotiation programs.
Negotiating contracts: what you want from a successful negotiation
In this article, I want to talk about the importance of doing your homework so you can effectively negotiate your contracts. The advice I'm providing does not replace the value of having a legal advisor help you to understand and structure your contracts; I highly recommend working with someone you trust and who knows your business. But whether you have legal support or not, I still recommend you read your contracts. When you understand them, you can negotiate for things that don't sit right, saving yourself significant costs.
Depending on the type of work you do and the nature of the agreement, the contract you sign might be created by you or the other party. If you're a consultant and proposing work for a large organization, that organization will typically provide the contract. Because they contract often, they will have a template they use. To them, it's not a big deal. From your perspective, it will be a frightening document. When you open it up, it will be 15-20 pages and a lot of the language will be technical.
There is no excuse for not reading your contracts
I know it's tempting to just read the scope of work section, which is the piece that you are directly responsible for. But you have to promise me you will walk through each section, one by one, so that you can understand everything you are committing to.
Make yourself a cup of coffee, print out the document, and get yourself a coloured pen.
Start at the beginning and work your way through the whole thing, section by section. Make notes where you are confused. Highlight things that are incorrect (did they spell your business name correctly, include the right dates and deliverables). Question the key commitments that are defined in the terms of the agreement. For example, are you required to store information in a particular way? Do you need to provide proof of a certain level of insurance? Are the deliverables and dates achievable? And what happens if you don't deliver in that time? What is the payment structure? Most organizations commit to paying you within 30 days of the final deliverable. Can you float that? Or do you need to request a split payment over a longer contract term?
Highlight your concerns with the contract and work to resolve them
If some of terms don't sit right with you, or you think they are ridiculous, given the nature of the contract, you need to flag them and ensure the contract is updated with language you can live with - before you sign the contract.
One of the issues that I'm working through is insurance. As a small business, I don't want to carry more insurance than I need. Cash flow is important to the stability of my business. Paying a higher than necessary insurance payment for something I don’t need is like buying a case of brussels sprouts that nobody in my family will ever eat. It makes sense to buy them if I'm having someone over who loves them, but I get no benefit from having them stink up my fridge.
Even though there is no need for a specific kind of insurance that is being requested, a part of me just wants to sign the document and call my insurance company and bump up the payment for the length of time of the contract. Except - the contract says that I need to have that insurance in place for a year after the contract expires. So instead of a small one time cost, I have to foot an unnecessary bill for a whole year. That's like buying brussels sprouts every month and letting them turn to sludge in my produce drawer - for an entire year. That stinks.
Lean in and be your own advocate in contract negotiation
So here's what I did. I reviewed the contract and made notes on it in tracked changes. I corrected the errors and added comment boxes where I wanted to challenge something. Yes, I had to think about the words that I'd use. I still want to come across as humble, of course (stupid blind spots). But I did this because it's my responsibility as a business owner to advocate for a fair contract for myself.
I'm still being me - a kind and compassionate person. But I have asked them to go back to their lawyer and offer an explanation of why those requirements are necessary for this particular agreement. As a point of reference, the cost of this insurance is at least 10% of the value of this contract - and completely unnecessary from the advice I have been given by my insurance company.
A few things I am not doing
I am not eating the cost without challenging it. Truly, the easiest way forward is to just sign the agreement and eat the cost. And I might still have to make that choice if the lawyer's advice is that it is required. But by asking, I've opened the possibility that I won't have to eat the cost. I had take a few breaths before I sent the email, but I did it. I made a reasonable request and hope that they will agree with me. If they don't waive the requirement, there remains the possibility that they'll lower the threshold, or reduce the length of time required to a month rather than a year. But none of that would happen if I just signed.
I am not making assumptions. In a 17 page contract, a lot is spelled out. But when I went through it with my red pen, I had a number of questions about the expectations. So I documented them and sent them back to the organization (in writing) for response. I know what I'd like the answers to be, but it's poor practice to move forward without clarifying your assumptions.
I am not letting urgency drive me. I'm definitely prioritizing moving the contract forward. I'm not playing games. I'm being responsible, respectful, and accountable. But I'm not committing to doing any work for the organization until I'm under contract. And I'm not allowing the deadlines and deliverables in the contract to drive me toward making poor decisions. In other words, I'm doing my due diligence and protecting myself as a business owner.
Mindset is key when you approach a new contract negotiation
I'm a pro at negotiating. I have gotten really good at identifying opportunities and asking for what I want. And that has come with practice. But the mindset work never ends.
Throughout the past few weeks, as we have been going back and forth, I have been tempted to start the work early, lower my rates so I can provide even more value, and throw in extras to demonstrate my worth.
And every time this happens, I need to remind myself that I am the only women's negotiation expert in Winnipeg, in Manitoba, and in most of Canada. I don't need to prove my worth. I need to be compensated for it.
Are you ready to learn how you can get what you want from your next contract negotiation?
Did you know than 60% of women will never negotiate a contact in their lives? Don't settle for less than you are worth. Through my Strategic Salary Negotiation course you'll gain the confidence and skills you need to get what you want from your next negotiation.