How to Negotiate When Your Company is in Flux

Change is hard. Whether it's a change in leadership, a merger, or an acquisition, your company is going through a lot—uncertainty about the future, job security, and money.

As someone responsible for your company's finances, you may feel pressure to cut costs wherever possible.

Unfortunately, while layoffs may be the most obvious way to do that, it's the most destructive.

Not only does it damage morale, but it also comes at the expense of people's livelihoods. So what's a cost-conscious CFO to do? The answer is negotiation.

How to Negotiate Lower Rates

The first step in negotiation is doing your homework. You need to know what you're up against and your options. So take some time to research comparable companies and see their rates. This research will give you a starting point for negotiating lower rates.

Will you always get these answers? No. But it's the first part of your preparation. Either way, you'll start working on your strategy to extract more value from your business partners.

Next, you'll want to consider segmenting your vendors into categories. Some basic categories could be:

• Transactional
• Maintain
• Nurture
• Strategic

Depending on the category each vendor falls in, you'll either take a transactional (value extracting) approach or a collaborative (value creating) approach. Then it's down to your team to go out there and negotiate.

Understand Your Leverage

One of the most important things to understand before entering into any negotiation is what leverage you have. Leverage is anything that gives you an advantage in the negotiation process. For example, if you're a small start-up company, your leverage might be that you're nimble and able to make decisions quickly. On the other hand, if you're an established company with a large customer base, your leverage is more bargaining power.

If your vendors are unwilling or unable to negotiate on price, there are other ways to save money. One option is to consolidate vendors. If you're using multiple vendors for the same thing, see if there's a way to streamline and use just one vendor going forward. One vendor can save you money on both fees and administrative costs. Another option is to renegotiate terms and payment schedules. Lengthening payment terms or paying monthly instead of upfront can free up short-term cash flow, which can be immensely helpful when times are tight.

Don't Hesitate to Ask for Help

Negotiating can be challenging—especially if it's something that you don't do often. If you struggle during negotiations, don't hesitate to ask for help from someone with more experience or expertise than you do. This knowledge could be from a colleague, friend, mentor, or even a professional negotiator (that’s us!). The key is getting another perspective on the situation so that you can come up with creative solutions for everyone.

There will always be some uncertainty when your company is going through a transition. But by being proactive and taking steps to reduce costs, you can help weather the storm and position yourself and your company for future success. So don't be afraid to negotiate with your vendors—it could be your best decision.