Solid business contracts fuel smooth operations for businesses that meet our demands and innovate for a better world. But what are the steps involved in business contracts? How can businesses form a winning strategy for mutually beneficial outcomes? This blog will explore the three steps of business negotiations along with the strategies and tools needed to succeed.

 What are business negotiations?

Business negotiations occur when two or more parties work together to exchange value or resolve conflict via a contract. They serve as the foundation for successful collaborations, deals, and partnerships – driving economic activity and growth. Successful negotiations ultimately impact the global market by facilitating trade, innovation and common ground between parties for win-win outcomes.

What are the key steps for business negotiations?

1. Preparation: Before you come to the negotiation table.

2. Bargaining: What you hope to walk away with from the negotiation table.

3. Closing: Wiping the negotiation table clean.

We’ll also discuss the business negotiation strategies and tools you will need to excel.

1. Preparation

For the initial stage of business negotiations (preparation), you should gather information, review past contracts, research the other party, draft a contract, and develop a strategy before entering into a negotiation. You should work to understand your needs and those of your counterparty and how best to put those needs into writing via a contract.

Consider reviewing past contracts, which are best sought and found in a highly searchable contract repository, where you can search down to the attachment, phrase, term, or even word level for insightful historical contract data and documents. You should also leverage reports and dashboards to view holistic contract trends at a glance and inform your decision-making when drafting and preparing to negotiate.

A good negotiator enters into a contract well-equipped, so consider merging contract data you’ve gathered (including counterparty data) with a pre-approved template for organization, clarity, and attention to detail. Consider auto-redlining functionality that virtually ensures your preferred clauses for any situation – including the one you are about to enter – are included in an automated fashion. Finally, you can take into account the needs of both you and your counterparty by leveraging generative AI to ascertain positive, negative and neutral sentiments for both sides.

2. Bargaining

The bargaining stage of business negotiations involves both parties actively discussing the terms of a contract and what they offer in an effort to reach a mutually beneficial outcome. This stage often involves making concessions and finding a middle ground between the two parties’ initial positions. Bargaining is your core discussion phase where the actual business negotiations take place; both sides (ideally) aim to claim mutual value within a defined range of variable possibilities.

Bargaining requires negotiation skills to redline and collaborate on a contract. There are many cooks in the kitchen, so a central collaboration interface – such as contract management software – is a huge plus. You should redline contracts – both internally and with the counterparty – and leverage numbered version control and full audit trails to keep track of every change made to a contract. Comment tracking can help you see the perspectives of all stakeholders in a timely manner. Utilising automated workflows for negotiation-related tasks and locking non-negotiable terms via clause ownership are highly recommended as well.

3. Closing

The closing stage of business negotiations is the final phase when the parties finalise the terms of the deal and formally conclude the negotiation process. Parties summarise key points, iron out any remaining concerns or ambiguities, and confirm commitment from both sides through a signed contract.

Many stakeholders often need to approve a contract. That’s why you should use approval workflow processes that can be initiated at any step in the contract lifecycle. You should also leverage reports and analytics for post-execution contract management and maintenance. Finally, electronic signatures allow you to sign virtually anywhere at any time – complete with signing workflows for you and your counterparty. Sign contracts easily to end business negotiations smoothly.

Conclusion

If you want to enjoy seamless business negotiations, you should have a well-prepared beginning, a widely-accounted-for middle, and a swift and smooth conclusion. That’s where contract management software comes in with all of the features listed above and more for a better negotiation and holistic contract lifecycle management strategy.

Why not try a demo of Contract Insight?

If you’re interested in how the contract management software can help your business negotiations, book a free demo of our award-winning, secure document storage and contract lifecycle management solution today.

Contact John O’Brien, CEO at Four Business Solutions – global business consultants and software integrators specialising in business process improvement.