10 Tips to a Successful Lease Negotiation
Posted on February 23, 2011
Filed Under Business, Computers and IT, Financing, Leasing, Negotiation, Printing and Graphic Arts | Leave a Comment
If you lease equipment of any kind in your business, you know how important it is for the lease to be fair and affordable.
You don’t need new equipment financing to stress company cash flow. Financial surprises are preventable and unwelcome. New headaches are unnecessary.
You call the leasing company or your banker and hope they put together a leasing contract that protects your interests. Negotiation time draws near.
How do you really know if the lease is fair to both parties? How do you prepare for the negotiation so the final lease is a win-win for everyone?
Before the Negotiation Begins
1. Understand how the leasing company thinks and what is important to it. The lease contract negotiation is much more than a single focus issue of the monthly payment. The negotiation must include the maintenance contract, equipment purchase price and future contract price increases.
2. Know how leasing companies define critical contract terms. Because the lease negotiation is not a daily occurrence, most financial professionals cannot translate “lease-speak.” In some ways it is a foreign language. You may need a “translator.”
3. Determine your non-negotiable issues. Write down your bottom line before the negotiation begins. Have another colleague hold you accountable.
4. Do your homework! Research the party with whom you will be negotiating. Use social networking tools such as LinkedIn and Facebook. Check out the leasing company or equipment dealer’s blogs and user online chat groups. Call your peer group members and ask for their opinions and experiences.
During the Negotiation
1. Ask for more than you need or expect to receive. Aim high. Why not? If you start low, you have nowhere to go.
2. Understand that you have to give to get. Make concessions slowly.
3. In a lease negotiation, the lessee usually starts the negotiation ball rolling. Write down all your lease contract changes, concerns and questions.
4. Present all contract changes at one time. Never send one change followed by another change the next day. That doesn’t work in equipment leasing. One compromise affects another; therefore, all changes need to be considered together as they relate to the entire document.
Counter-Offer and Documentation
1. Use the red line editing function in the electronic document. This provides a historical perspective. Change the file name to avoid confusion in tracking the most current contract version.
2. Check all final draft documents. It is amazing how sometimes-negotiated changes “disappear” in the final draft. When not all negotiated modifications are included, the customer is the one hurt the most.
Be prepared. Follow the steps and commit the time necessary for proper evaluation and negotiation.
The result will be:
- A lease agreement that achieves your company financial and cash flow goals.
- A lease that is “gotcha” free.
- Equipment that fits your needs, is technologically up-to-date and a pricing plan that fits your company budget.
Are you in Jeopardy when you lease? What is Fair Market Value?
Posted on February 7, 2011
Filed Under Business, Computers and IT, Financing, Leasing, Negotiation, Printing and Graphic Arts | Leave a Comment
“Russell is a risk taker,” Alex exclaimed! “Russell, the answer for $200 is ‘About 10%.’ What is the question?”
In case you are not a television aficionado, Alex Trebek is the host of Jeopardy, one of the longest running television game shows.
Our “competitor” Russell, a printing equipment sales professional, thinks he’s on solid ground selecting the Leasing category. Russell has been selling equipment for 10+ years. He uses leasing to close sales when buyers say, “Your price is too high.”
Russell responds confidently, “Alex, the question is ‘What is Fair Market Value?’”
No, I’m sorry Russell, you are only half-right.
Real Life
Fair Market Value is seldom “about 10%.” Although many leasing salespeople tell customers that 10% is their best estimate of what they’ll pay at end of lease.
Here are four Fair Market Value definitions. You should understand all of them if leasing is a one of the ways you finance equipment additions.
- Fair Market Value. No process defined. No parameters. Buyers beware. Read the contract and see what other options you have. Negotiate whatever the leasing company tells you.
- Mutually Agreed to Fair Market Value. The leasing company determines the purchase price, not the customer. The lease agreement doesn’t contain a process to determine the price. Some lessors may feel that “I am the leasing company and you’re not. It’s my way, the highway or worse.” Worse may be a 12-month lease renewal followed by another Fair Market Value purchase option.
- In-Place, In-Use Fair Market Value. This is tricky. Lessors may add extra costs not financed in the lease. If equipment requires added expense to install and de-install, such as rigging, site preparation, special electrical wiring, then these expenditures may be added into the now “not-so-fair market value” option.
- Greater of Fair Market or 20%. The Fair Market Value may be more than 20%. If no process is defined, the price is usually higher than customers expect.
These four definitions are not the entire list of purchase options. If you find others in your leases, please share them with me. I will give you proper credit for your findings in the next blog.
Remember my motto: Everything is negotiable, if only you ask!
It’s best if you negotiate before you sign the lease. However, if you’re facing the end of lease Final Jeopardy Round, call us. We can help you renegotiate and save money.
Read more about Fair Market Value in this article.
Negotiation Do’s and Don’ts
Posted on January 21, 2011
Filed Under Business, Computers and IT, Leasing, Negotiation, Printing and Graphic Arts | Leave a Comment
Negotiation Do’s and Don’ts -
Top 5 Things to Prepare for Now
Life is filled with negotiation opportunities. For some people, their livelihoods are tied to every negotiation attempt.
As a business owner or manager, you are constantly negotiating with customers, salespeople, suppliers, employees, board of directors, boss, manager or colleagues.
Add to that list the banker, leasing company, healthcare insurance provider, building landlord or facility management company, IRS, US Postal Service and maybe a local or state legislator.
Negotiation for some is a natural habit. Their motto, like mine, is “Everything is negotiable if only you ask.” Or maybe it’s like my friend, Greg Williams, The Master Negotiator (http://TheMasterNegotiator.com), who believes that “You are always negotiating.”
Now is a great time to think about the negotiation opportunities that lie ahead this year. Here are a few “do’s and don’ts” I have found helpful.
5 Do’s
- Do your homework. Research the party with whom you are to negotiate long before you meet.
- Study the science of body language. Learn how to read people. The mouth lies, the body does not.
- Write down your negotiation goals. Share them with someone who will hold you accountable. No fibbing. You cheat yourself if you do.
- Dress powerfully for you and your profession. Feel strong and you will be strong.
- Remove time pressures. Many a negotiation outcome was blown due to an untimely departure for the airport.
5 Don’ts
- Don’t assume you know who the decision maker is. Get confirmation from reliable sources.
- Don’t overlook your team’s important roles. Prior to the first meeting, confirm the roles of your team negotiators.
- Lead negotiator
- Note taker
- Back-up negotiator who may step in when the lead sends the signal for assistance, a breather or a switch of roles.
- Mediator, if things get heated, who can step in and restore balance and order.
- Don’t let someone from the other side take the negotiation minutes. Each side needs its own record.
- Don’t leave a negotiation meeting without assigning responsibilities in preparation for the next meeting. Review the assignments before departure.
- Don’t assume everyone will remember the assigned responsibilities. Confirm the assignments in writing with all negotiation participants within 48 hours following each meeting completion.
May this year open up more opportunities for negotiations for you. Invest in yourself and learn more about negotiation. Your happiness and success are in your hands.
“Everything is Negotiable if Only You Ask.”
Want more information? Click here for helpful negotiation resources.
Need to improve your negotiation skills? Click here for negotiation workshops and training.
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