The negotiation process doesn't always end when the ink is dry on the contract.
Sometimes, changing market conditions or unexpected circumstances make it necessary to renegotiate the deal. Sound uncomfortable? It is – but renegotiations are a fact of life in uncertain business environments.
Renegotiations commonly occur in deals with contracts. At some point, it becomes impossible for one party to live up to the terms of the original deal. If the contract isn't renegotiated, it may be breached – and breach of contract isn't an attractive option for either party.
The party that requests a renegotiation will have the weaker position, unless the party requesting the renegotiation recognizes a deficiency in his opponent and is proactively pursuing a remedy. The fact that the weaker party will have to give up something in the renegotiation is a given. If your hand is weak, here's how to ethically navigate a renegotiation and emerge without losing too much ground.
- Be transparent. If you need to request a renegotiation, you're already in a position of weakness. Don't make the situation worse by trying to hide the facts from your opponent or by putting off notification until the last possible moment. Transparency is rewarded during renegotiation. Lay your cards on the table and let them fall where they may.
- Propose solutions. It's important to enter a renegotiation with a proposed solution in mind. The other party is not going to suggest a solution until he has heard your offer. No matter what strategy you employed during the initial negotiation, a hardcore, tight-lipped strategy won't cut it in a renegotiation.
- Make it worthwhile. Your proposal should include something that makes a renegotiated outcome attractive to your opponent. For example, if you're renegotiating your monthly lease payment, consider offering to extend the lease another six months on the backend. Even though a renegotiation will result in less income for your landlord, he gains a guarantee that the space will be occupied for at least six additional months.
- Consider easy concessions. If your opponent originally made concessions that you can easily give up, now is the time to think about letting them go. During the renegotiation process, you'll want to prioritize potential concessions to minimize the impact on your business.
- Build relationships. The real value of a renegotiation might be in the development of the relationship you have with your opponent. Fairness, transparency, and equity have value in the business community and can be used to solidify a relationship in a renegotiation scenario.