You can't always win in negotiations and knowing when to walk away is essential to preserving your interests. Trying to simply close a sale regardless of the cost can lead to undesirable effects in the long run. Harboring the attitude that you must close a deal at all expense will cost you.
You may be tempted to agree to certain terms in the heat of the moment just to have another deal under the belt. However, conceding to terms that don't directly benefit you can lead to future disasters including additional costs, losing valued personnel, wasting time, and even compromising your professional reputation.
The Dangers of Accepting a Bad Deal
People often have a psychological bias when it comes to negotiations. They may think that the most important thing is to close a deal as this is often seen as the most successful outcome of a negotiation. However, not every deal is created equally and while some may be highly beneficial, others can actually do more harm than good. Here are some of the potential hazards of accepting a raw deal.
Accepting a deal in the heat of the moment can come with unforeseen costs. It's important to mentally explore every part of a new contract before agreeing to ensure that you'll be gaining rather than losing. Costs can come in many forms, including lower commissions, higher interest rates, or unseen costs.
Losing Valuable Personnel
When agreeing to a deal, you should always make sure that those working alongside you are okay with the outcome. Simply agreeing for the sake of agreeing can lead to the loss of valued personnel. Be sure to keep their interests in mind before agreeing to terms. Play it safe if something comes across as iffy. You can always revisit it later.
Damaging Your Market Reputation
You don't want to acquire a reputation as someone who always agrees to given terms. This will lead to people frequently trying to exploit you because they've heard that you're easily malleable.
Agreeing to bad terms can cause your reputation to be damaged in other ways. You might end up agreeing to terms that restrict you and take away your ability to act freely in your market or industry.
Avoid Making Redundant Revisions
If you already have the sense that this deal is going south but you've been asked to make revisions, think carefully about what to do next. Don't simply make revisions to keep the other person happy — you also need to protect your interests. Unless you have a strategic goal in mind with your revisions, don't bother. Always consider the possibility that walking away might be better.
Contract Presentation: Detail Matters
When proposing a contract, make sure that the presentation of the document is on point. Many people may argue that the content is the most important thing; however, this is not always true. Pay attention to the fine details when preparing your contract. This includes font, format, and general organization. Be sure to compress a PDF online to have a smaller file to send.
You Can't Always Win
Settling for undesirable contract terms can have many disadvantages and should be avoided where possible.
If you're interested in topics like this, consider joining your local chamber of commerce.