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Ok, maybe not fun, but definitely for profit! In an economy where prices are rising and consumers are spending less in many sectors, every entrepreneur needs to look at ways to increase net profits, and when possible, do so without cutting services – which may end up doing more harm than good. One step many business owners can take is renegotiating vendor contracts. You might think that if there is a contract in place, you have no bargaining power. In many cases this can be true, but there are other factors involved that make it worth trying. The primary reason it doesn’t hurt to ask is that chances are your contract isn’t permanent. In other words, there will come a time when it runs out. All businesses, including your vendors, are in a similar boat right now, and they might be willing to work with you now and take a little less rather than losing your business altogether when it’s time for a new contract. Also, you really have nothing to lose by asking. If you do so professionally and in the interest of mutual benefit, no harm should ever come from asking. 4 Steps to Renegotiation Success 1. As with any part of your business, it’s best to go into this process with a solid plan. Begin by reviewing each of your vendor contracts and determining who the best candidates for renegotiation are. It can help a lot to know as much as possible about their industries. If you know, for instance, that a specific vendor has lost some market share recently, they might be more willing to deal. 2. Do some research to compare your contract pricing with the going rate of the products and services you’re paying for. While a lot of prices have gone up, you might find that something like your equipment or property leases are overpriced compared to the market, due to low demand. You aren’t gathering this information to beat your vendors up with it. You will use it to determine if and what you should ask for in a renegotiation. 3. Once you’ve determined which vendor contracts are good contenders for renegotiation, and you’ve completed your research to see how your pricing compares with the going rate, it’s time to decide exactly what you want to ask for. In any negotiation, it is critical to walk into it knowing precisely what you will ask for and how much you’re willing to give. This doesn’t have to only be about hard dollars. In addition to pricing you might also be able to restructure your payment terms, interest rates, or service agreements. One thing to be ready for is the vendor asking you to start a new contract term or extend your contract. Think about what this will mean and what you’re willing to concede. 4. Now it’s time to make the pitch. Without sounding like you’re giving them a sob story, be candid with the vendor about your company’s financial situation. Letting go of a little pride at this time can make a big difference. A company isn’t likely to give you concessions because they feel sorry for you, but they just might work with you if they think not doing so could mean losing you as a client because you’ve closed down. Tell the vendor what your proposal is and why it makes sense for them. And remember: The better prepared you are, the higher your chances of success during this process. Throughout the renegotiation process, it’s important to remember that your vendor is not your enemy. The best chance for successful renegotiation comes when you can create a win-win – when there is a clear benefit to both parties to make it happen. What experience have you had with renegotiation? Share with the community in the comments, or on our Facebook page !