Small businesses may be forced to close temporarily due to personal emergencies, weather-related issues, or other unexpected and unpreventable circumstances. Running a small business successfully means being prepared for such occasions, and negotiating with vendors and landlords to stay afloat.
When disaster strikes, knowing how to extend deadlines on your bills effectively and how to reduce costs may be the difference between your closure being temporary or permanent. These strategies will help you negotiate with landlords and vendors successfully.
Start with a negotiation plan
The moment you know that your business will have to close temporarily, take a look at your monthly financial obligations and your most immediate due dates. Prioritize the largest commitments and begin negotiating terms as soon as possible.
Will Ward, founder and CEO of Assistive Listening HQ, suggests that business owners not delay launching negotiations. "Prolonging negotiations until you miss your payment will put you in a weaker position to ask for concessions," he says.
Think long term when considering how to negotiate rent with your landlord. If many of a property owner's tenant businesses can't re-open, they will lose tenants, so they may be more flexible with their remaining ones.
Brian DeChesare, founder of Mergers & Inquisitions, an investment banking career blog, says that surviving businesses can negotiate lasting savings. "If you notice several vacancies in your commercial complex, offer to sign an extension for another three to five years at a discounted rate," he says.
Bring something to the table
If you are negotiating a better rate or terms for your business, you will need to offer something in return to make it worth the other party's agreement. If you are speaking with your landlord, Ward suggests offering to move up your negotiated contract's rental payment date. He also recommends outlining for your landlord of all the ways in which you've been an ideal tenant.
"Your spotless history in terms of payment, good maintenance, and creative investments you've made on the property can remind your landlord that you're nearly irreplaceable," he says. "Back up all your points with data."
Ward says that asking vendors for a short-term discount allows them to keep you as a customer while making it possible for you to continue to afford them. A discounted order is better than a canceled one."From the vendor's point of view, it's better you stay in business," Ward says.
Make it personal
Just as you are in a moment of financial crisis and need assistance, your landlord and vendors likely fear losing money and business, at least in the short term. To preserve your relationships, show empathy. Inquire about their struggles and keep their position in mind.
DeChesare says that any communication about canceling or reducing orders should be done by phone. "If you are planning to cancel an order, don't do it via messaging. This can come off as rude," he says. "Also, canceling the order should be a last resort. See if you can creatively reduce the volume of the order. Explore all options."
When Aalap Shah, founder of 108, a Chicago-based digital marketing agency, needed to negotiate with the owner of his office space, it required many follow-ups before he was able to reach someone. "I was able to connect with a senior-level person where I had a phone conversation to discuss the situation and options," Shah says.
During any crisis, the best decision is to act quickly and face any financial negotiations head-on. Although you may be experiencing a difficult time in your business, remember why you are valuable to your lenders, vendors, and landlord. Keep communications personal and empathetic to negotiate successfully. When the difficult period has passed, your business will only be that much stronger.