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15 Things to Remember When Preparing to Negotiate with a Larger Company

ByScott Gerber,
business.com writer
|
Aug 13, 2019
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1. Communicate effectively
2. Look at the terms closely
3. Don't give up your business if you aren't ready
4. Look at the details
5. Focus on collaboration
6. Require fair terms
7. Be prepared and willing to walk away
8. Do your research
9. Know what leverage you have
10. Expect more back and forth
11. Consider all possible outcomes
12. Use third-party criteria if needed
13. Understand the decision makers
14. Be confident
15. Stand your ground

Research, and the right attitudes, can help you find success

When a large company wants to reach an accord with your smaller company, it can be an exciting time, but it can also raise many questions, particularly if this is the first time you've dealt with this kind of deal. What kinds of research should you do ahead of negotiations? What kinds of attitudes should you have, going in? How long will the process take?

To help you prepare, 15 members of the YEC, below, discuss some of the things small businesses should remember when negotiating a contract with a larger company, as well as discuss why. Here's what they said:

These answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most successful young entrepreneurs. YEC members represent nearly every industry, generate billions of dollars in revenue each year and have created tens of thousands of jobs. Learn more at yec.co.

1. Communicate effectively

We often seek to be understood before being willing to understand which often results in ineffective communication. Having a clear understanding of the other party's propositions and goals is an important prerequisite for any successful negotiation to take place. Knowing exactly what value they add to your firm will also be helpful when considering alternatives, in case things don't work out.” - Abeer RazaTekRevol

2. Look at the terms closely

Sometimes small businesses that are new to negotiating contracts with big companies will pay close attention to the price and totally forget about looking closely at the terms. So, before agreeing to a contract, go over the terms carefully. You may find some that are unacceptable. You can also have an attorney look at the terms so they can point out any issues you may have missed.” - Stephanie Wells, Formidable Forms

3. Don't give up your business if you aren't ready

A big-time deal with a large business usually means they are planning on trying to merge or buy you out. If you're thinking about retiring early, this could be a good deal for you. However, if you see more potential in your business, don't give it up until you're ready.” - Syed Balkhi, WPBeginner

4. Look at the details

Rather than agreeing to the full project scope, trim items and services that add little value to the overall agreement. Instead, stay focused on only the highest-ROI portions and negotiate based on those deliverables to minimize your costs while improving your bottom line. Often, counterparts will include features that are low value to the buyer, but high-margin for them.” - Firas Kittaneh, Amerisleep

5. Focus on collaboration

Ask how you can make this a win-win for everyone. Dealing with a larger company, it's easy to feel that they inherently have the upper hand or they plan to beat you up on pricing. But, they are negotiating with you for a reason, it's because you bring something of value to the table. Be strategic. Focus on being collaborative and voice that you want this to be a win-win all around.” - Lisa Song Sutton, Sin City Cupcakes

6. Require fair terms

“Large companies often try to stuff aggressive terms into their agreements with smaller companies. Point out that that you’re trying to optimize for project success and in order to do so, you require fair terms. Explain why some terms might be overly aggressive by painting scenarios — even if a bit unrealistic — that show why a particular clause or point might concern you.” - Ryan D Matzner, Fueled

7. Be prepared and willing to walk away

It's important to remember that you can always walk away, no matter how powerful or intimidating the other company is. In other words, even though they may be more powerful than you, they are not superior. If you are unwilling to walk away, desperation has a way of creeping into your communication, which automatically gives your interlocutor the upper hand.” - Shu Saito, Fact Retriever

8. Do your research

If you're negotiating a contract with a large company, make sure you research the business and owners before you meet at the table. The more you know about the people you'll be talking to, how your brand can help theirs and what kind of deals they've made in the past, you'll be ready for a solid negotiation.” - Blair Williams, MemberPress

9. Know what leverage you have

The key to protecting yourself and getting better terms out of a contract is being sure of what you offer, so that you can't be bullied. Before entering into an agreement with a larger company, carefully research what you can provide that they don't yet have access to. Consider the worth of your market position, penetration and any relevant IPs that your partner will depend on.” - Matt Doyle, Excel Builders

10. Expect more back and forth

If you're coming from a startup background, keep in mind that negotiating with large companies is an entirely different ballgame. It'll take a lot more patience and back and forth than you're used to with smaller companies. Maintain your professionalism from start to finish, even though it may be a long road.” - Frederik Bussler, bitgrit Inc.

11. Consider all possible outcomes

Oftentimes, we like to plan ahead so we know what to expect in the future. Before you go into a meeting to negotiate a contract with a large company, you have to consider the impact this interaction could have on your future goals. For example, if you wanted to open up a new business, could you profit enough off of this sale to get started? It helps to consider all possible outcomes for your future.” - David Henzel, LTVPlus

12. Use third-party criteria if needed

If the larger company tries to bully you in the negotiation, use objective, third-party criteria to resolve your differences. If you can point to objective third-party sources as the basis for your position, the larger company is more likely to agree to your position.” - Doug Bend, Bend Law Group, PC

13. Understand the decision makers

Larger companies have a much more complex decision-making process than your average client. Try to understand what parties are going to be on the other side of the table and what each of them are looking for. Even though your point of contact might be in marketing, is tech going to be involved? What are they going to want? Do your homework and make it easy for everyone to say 'yes.' ” - Karl Kangur, Above House

14. Be confident

When you're negotiating a contract with a larger company, you might tend to put yourself down. You might have thoughts that they're more powerful than you, have more money, and so on. But, it's important to build yourself up before going into a negotiation. Remembering what you have to offer and why you're there will give you more confidence. More confidence can lead to better negotiating skills.” - John Turner, SeedProd LLC

15. Stand your ground

It's easy for young companies to be trampled over when it comes to contract negotiations with a large company. Don't forget that this larger entity is hiring you because they need your product or service, and do everything possible to stand the ground of your typical contractual terms. Don't roll over too soon, yet be receptive to reasonable requests and feedback which can help you can improve.” - Keith Shields, Designli

Scott Gerber
Scott Gerber
See Scott Gerber's Profile
Scott Gerber is the founder of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses. Gerber is also a serial entrepreneur, regular TV commentator and author of the book Never Get a “Real” Job.
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