A contract is the foundation upon which the success of your startup and corporate partnership is built.
It can be as sturdy as stainless steel or as weak as Swiss cheese, filled with legal holes.
As a founder venturing into negotiations, you're establishing a legal agreement.
But how can you navigate the negotiations to ensure you achieve what you’re after and remain legally protected throughout?
How to understand procurement contracts for startups
A procurement contract between startups and corporates emerges when two entities negotiate to exchange:
- Resources (including funding)
- Commitments to future collaboration (such as services, resources, or partnerships)
While verbal agreements are an option, they often lead to ambiguity, making written contracts the safer choice for startups.
Top strategies for startups negotiating with corporates
1. Comprehensive Research: You need to deeply understand the company and individuals you're set to negotiate with before you begin any conversations with them.
2. Meticulous Contract Preparation: This phase is the cornerstone of your negotiation journey. You need to clarify your goals and objectives before stepping into procurement discussions to keep negotiations on the right track.
3. Defining Your Position: Your position forms the core of your proposal to the negotiating party. You need to craft a backup position in case the initial offer doesn't align with their expectations. Maintain flexibility to navigate the negotiation process but don’t allow yourself to agree to things that don’t align with your business values.
4. Evaluating the Other Party: You need to take a step back and analyse your prospective partner's position, aligning it with their expectations and your own. You need to understand their priorities, goals, and potential objections so you can be prepared for any hurdles that may arise.
5. The Power of Listening: Procurement contract negotiation isn't a one-sided conversation. You need to invest time in listening to your counterpart. By actively listening, you uncover their priorities.
6. Strategic Concessions: You need to avoid hastily accepting or offering concessions. Take your time and, if necessary, set aside concession requests for later consideration. Always ensure that concessions bring equal or greater value in return. This is where your earlier preparation will help you to make tough decisions.
7. Fearlessly Saying No: You need to remember, a subpar agreement can be more detrimental than no agreement at all. If your prospective partner's proposal doesn't align with your goals and objectives, don't hesitate to decline. They aren’t the only corporate partner out there.
8. Confirming the Agreement: After reaching a tentative agreement on both parties' contractual obligations, you need to reinforce the terms by confirming them verbally and in writing.
The easiest way to handle negotiations
In negotiations, it's not uncommon for the other party to introduce unexpected demands or requests for additional concessions, just when you thought the deal was sealed.
You need to not shy away from asserting the initially agreed-upon terms to keep your startup safe.
Corporate negotiations can be daunting, but Stone & Chalk is here help.
As a resident, we provide you with ongoing expert assistance as you navigate building corporate partnerships
Not only can we help with the negotiation process, but we can also help you find corporate partners and get procurement ready.
Find out more about joining Stone & Chalk.
