When facing a tough set of business circumstances, having employees, mentors, and partners you can lean on for extra support is sometimes the thing that gets you through. That's why it's so important to build relationships with vendors based on honesty, transparency and respect for each other's goals, rather than just bottom lines.
As the customer, you have bargaining power, because your vendors want your business. They will usually be willing to negotiate agreement terms instead of losing you as a customer. But don't abuse your power. Your knee jerk reaction may be to push for every concession in the book, or to cut vendors loose completely to reduce costs, but the better approach is to take a step back, look at the big picture, and figure out strategic, mutually beneficial ways to continue to work with your valued vendor partners so that you both come out of tough times stronger and better than before.
When the going gets tough, it makes the road ahead a little less bumpy. Follow these guidelines to foster a better, more productive negotiation process.
The partners that help a company survive in the short term will be the ones that are valued in the long term.
If you approach negotiations with a "we're all in this together" mentality, you're more likely to keep those partnerships intact. Before you make any requests, put yourself on the receiving end. This will help you empathize and troubleshoot any potential questions, concerns or other issues.
In an economic downturn, everyone is hurting. Vendors should understand the impact of circumstance on your business and keep that in mind when you're asking for a concession or to renegotiate your contract.
Temporarily redefine your short-term goals.
Instead of ending a relationship, consider setting new parameters for how you operate. If you have an SLA, review it to identify any areas that can afford to be relaxed for a period of time. Or if you've been working on a retainer model, consider moving to an hourly rate arrangement while you get through this rough patch.
Try to identify mutually beneficial solutions.
For example, securing longer payback terms is typically ideal for business owners; however, that goal of delaying payments flies directly in the face of your vendor's goal, which is to get paid as soon as possible. Early payment discounts are a great example of negotiating terms that suit both parties. Your vendor gets paid sooner while you realize a small discount for paying early. They will also appreciate your efforts to come up with a solution to secure a long-term partnership as opposed to canceling the contract.
The foundation for all successful exchanges is good communication. Make sure your vendors understand your situation and the steps you are trying to take to address it. Throughout your exchanges, you may not have the answer to a question at your fingertips, but being attentive and responsive in the meantime can contribute greatly to strengthening your rapport and nurturing your working relationship as you work toward closing those loops.
Finally, whenever possible, pick up the phone. Relying on email or texting risks losing important conversational nuances. Nothing replaces the effectiveness of a real conversation.