When you are running a business, one skill you need to learn and you need to learn quickly is how to negotiate. If you just accept every offer that comes your way, you are likely to spend more than your company can afford. Not being able to negotiate effectively can also mean that you aren’t getting the greatest value from the vendors or services you use. No matter how long your company has been in business, here are five areas where negotiating really pays off.
There’s ample space for negotiating before you sign a lease, whether you’re moving into a building for the first time or considering renewing an existing lease. The two big things you should negotiate with the landlord are the monthly cost of rent and the term of the lease. When you’re negotiating, your goal is to get two things: a monthly rent you can afford and an assurance that you won’t have to deal with surprise rent increases.
If the rent per square foot is a bit beyond your budget, you can try to negotiate a longer term with the landlord. A building’s owner might be willing to give you a break on rent if you’ll be there for at least or year or two, as that will save him or her the hassle of trying to find a new tenant. You can also negotiate extra fees and maintenance costs. The landlord might give you a break on rent if you bring in your own cleaning company, for example, or if you offer to handle small repairs yourself.
IT and Outside Vendors
Don’t be afraid to negotiate with your vendors, such as your business’ IT company or the company that supplies you with paper or furniture. There are several ways to go about negotiating with your suppliers and vendors. If your company goes through a lot of paper, for example, you might try negotiating a volume discount with your paper company. You can also try to negotiate extra perks from a business. A supplier might not be able to offer you a lower price, but it might be able to offer you expedited service, free shipping, or personal assistance when you need it.
Negotiating the terms of a loan or negotiating with your credit card company can save you a considerable amount of money. Having a good relationship with your lender is a key part of negotiating your loan. If you have a history of missing payments or paying late, a lender or credit card company will be less likely to work with you.
There are several things you can negotiate with your lender. Interest rates are a big one, as getting a lower rate means you pay less in the long run. One way to negotiate with a lender is to have it offer you a reduced rate after a certain number of on-time payments. If you mainly finance your business with a credit card, you can work with the card company to see if it will give you a higher credit limit.
Paying for insurance is often more affordable than dealing with liability costs or other problems that can arise. But, all of the insurance policies your business needs to be fully protected can add up when it comes to monthly premiums. If your insurance company is threatening to raise your rates, it’s worth trying to strike a deal with it. One option is to offer to combine multiple policies with the same company. Often, companies offer a discount for multiple policies. It can also be worth it to play different insurance companies against one another. Get quotes from a variety of companies, then go back to the one you want to work with the most, with the lower priced quote from another company, and see if the preferred company will match it.
Employee Benefits and Salary
If you want the top talent working for your company, you’re going to have to negotiate with them. Keep in mind that it’s not just salary that you’ll be negotiating. You’ll also need to work out a perks and benefits package for employees. Even if your business can’t pay the high salary an impressive candidate wants, you might still be able to work out a deal by offering a good 401k match, the option to telecommute, and an impressive health insurance policy.
Negotiation is part of the process of building long-lasting relationships. If you’re struggling at the negotiation table, the team at New Direction Capital can help. Working with our virtual CFO can help your company figure out the best way to interact with vendors, landlords, and potential employees. Contact us today for more information.