Contracts are everywhere in today’s world. Whether you want to get faster internet installed or get a new vendor technology solution, you first need to sign a contract for it. Negotiating should therefore be a skill in any good company’s armor. A well thought out negotiation can save you tens of thousands of dollars, if not more, over the course of several years. Very few companies however start with the prerequisites necessary for a successful negotiation. Preparation is key and the first hurdle to cross is defining key factors that will help drive the rest of the negotiation.

1. Define the Strategic Direction of the Organization

Your firm most likely already has a strategic direction and you may think this step to be basic, but it is important to understand the strategic goals of your organization. This allows you to understand how the technology and vendor can support the firm’s growth.

2. Define Your Goals for the Contract Negotiation

Having a clear understanding of what you want to get out of a negotiation before you enter it is critical. Clear goals, like better SLA terms or third-party data integration, should be laid out before you sit down at the negotiation table. Be sure to include “must-haves” and “nice to have” goals – this will help you approach the negotiation holistically and not get bogged down by any one point.

3. Define Your Minimum Level for Success

Once you have defined your goals it is necessary to establish a sliding scale of success. At what point do you walk away? What is the minimum level of success required? Clear answers to these questions will help you stay anchored during the negotiation. It is important to be explicit on what is important to your firm.

4. Define the Process

The final piece of the puzzle is defining the process to help you achieve the outlined goals. This means you will need to define how the negotiation will take place, outlining key decision points and ensuring to craft language that promotes your goals instead of stifling them. Once the process is set ensure all the internal stakeholders have a clear understanding of the path forward.