Contract Negotiation Strategies to Consider

A native of India, Ashu Bhandari is an entrepreneur who leverages his expertise to lead his consulting firm. Ashu Bhandari guides business owners on several aspects of entrepreneurship, including cash flow management, product diversification, and contract negotiation.

A business owner must develop strong contract negotiation skills in order to reduce risk and boost revenue. While compromise is a necessary aspect of the negotiation process, properly using certain strategies can increase one’s ability to achieve the outcome he or she prefers.

1. Taking control of an agenda leads to more promising results. A person who takes the initiative to plan a meeting, draft topics for discussion, and direct the pace of a negotiation can focus on the subjects most important to his or her business. This can also be achieved with a passive approach, by summarizing details of a negotiation and framing it in a way that is conducive to the person’s business.

2. Avoiding an “all-or-nothing” approach keeps negotiations from coming to a standstill and diminishes the risk of both parties leaving unsatisfied. Instead, a skilled negotiator compartmentalizes subjects to reach an agreement on individual topics. This also makes both parties feel like progress is being made.

3. Identifying top priorities keeps a negotiator from becoming slowed down by less important items during a negotiation. A person should prepare in advance by ranking the level of importance for each topic. If concessions must be made while meeting, then the negotiators can use the list to help them make compromises on items least important to them in order to gain leverage on major priorities.

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How Much Money to Spend on Business Marketing and Advertising

A retired business executive, Ashu Bhandari spends part of his spare time providing consulting services. Seasoned in business management, operations, and promotion, Ashu Bhandari utilizes his expertise to counsel local businesses in areas of public relations and advertising.

Among the most difficult parts of owning a business is determining how much money to allocate toward business needs, such as marketing and advertising. For companies making less than $5 million in sales annually and earning 10 to 12 percent net profit margin, the United States Small Business Administration recommends setting aside 7 to 8 percent of a business’ gross revenue for marketing use.

However, this number varies according to the competitiveness of an industry and the length of time in operation. In some instances, marketing experts suggest small businesses use up to 3 percent of revenue to promote their products or services.

In fact, a 2010 Chief Marketing Officers Council survey indicated a majority of chief marketing officers spent less than 4 percent of a company’s gross revenue on promoting and advertising the business. In total, nearly three-quarters of survey participants allocated 6 percent or less to marketing initiatives.