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You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your contract negotiation service. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a contract negotiation service?
The costs involved in opening this business can vary. For instance, if you choose to get a Bachelor's Degree in a field to help you get started, then you may pay $36,000 or more for four years' tuition at a state college. Getting a certification from the National Contract Management Association in something like “Certified Federal Contracts Manager” has a $199 application fee and a $125 examination fee. Beyond these, the costs are minimal: you can conduct your business from home, requiring no monthly lease or utilities. Your remaining costs will likely be $3,500 or less, with $500 or so going into creating a professional web page and the other $2,000 in advertising your services within the community via newspaper and television (television ads will understandably be more expensive than newspaper ads).
What are the ongoing expenses for a contract negotiation service?
If you do this job from home and meet clients when necessary, there are very few ongoing expenses. These expenses include gas to meet with clients, periodic business lunches, and so on; these costs will vary from month to month, but should remain relatively low. You may wish to budget $100 a month to print additional business cards and other stationery to make your job easier; beyond these things, though, your costs are otherwise covered.
Who is the target market?
Your preferred customers will likely vary by region and specialty. In areas with strong unions, for instance, labor union contract negotiation may be some of your most regular work, while someone specializing in employee contract negotiations may prefer small businesses. Regardless of the exact group, your best clients will be those who are patient, willing to carefully review your work, and willing to work with other parties in good faith.
How does a contract negotiation service make money?
On the most basic level, a contract negotiator makes money by successfully negotiating contracts. You must determine whether you will bill clients by hour or by a flat fee.
How much can you charge customers?
If you charge clients hourly, it is reasonable to charge between $20 to $60 an hour. If you charge a fixed fee, that exact amount will typically vary based on how long you think a particular job may take.
How much profit can a contract negotiation service make?
According to Payscale, the median income for contract negotiators is just under $70,000. Obviously, the size of your area and the number of your clients will influence your exact pay, and it is certainly possible for this job to be more lucrative.
How can you make your business more profitable?
Consider the impact of visual aids: after you have some successful negotiations under your belt, try to create infographics and other visual information that shows your success rate as a negotiator and how you have had a positive impact with regards to particularly companies. Don't be afraid to ask clients to refer people to you after a successful negotiation. Finally, try to include satisfied client testimonials on your webpage so that potential clients are not simply taking your word for it about the quality of your business.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your contract negotiation service is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a contract negotiation business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Contract negotiation businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your contract negotiation business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a contract negotiation service
As mentioned earlier, you should consider advertising via newspaper, television, and your own website. It is also worthwhile to create a social media presence so that potential clients have more channels to discover you and your services.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Attracting customers is primarily a function of your marketing and networking skills. Customer retention should occur naturally after your first successful job with a company; this is because good negotiators can be hard to come by, so if you illustrate that you understand the needs of a company and its workers, they will gladly bring you back for future work rather than risk hiring someone new who will not do as good of a job.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Contract Negotiation Service In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
This business is best for those who are able to easily understand various points of view from different parties. An ability to quickly gain confidence in others and persuade them to make necessary compromises is also beneficial. While it is not strictly required, having a college degree in fields such as business, political science, or a related field in which you intend to specialize can help you out, and it may be necessary to negotiate certain contracts with certain companies.
What happens during a typical day at a contract negotiation service?
On any given day, your responsibilities will include communicating with current clients as well as reviewing and analyzing contracts. You will also need to study and review laws, legal precedent, and business histories relevant to whatever contracts you are currently working on. You will also be meeting with multiple parties involved with the contract in order to create one that best represents everyone's interests.
What are some skills and experiences that will help you build a successful contract negotiation service?
As mentioned above, a formal education in a related field can help you build a base of skills to help you establish this business. Having a graduate degree (such as MBA or law degree) can open up more doors for your services. Previous employment experience in some of the industries and fields you will be assisting can help you understand the culture surrounding some of the issues you will be dealing with. Finally, being in a network that includes the managers, HR specialists, and other people you may work with can help foster trust in you and your skills.
What is the growth potential for a contract negotiation service?
The growth potential for this business is somewhat mixed. The Bureau of Labor and Statistics projects employment in the related field of Labor Relations to drop by eight percent between 2014 and 2024, primarily due to the decline in workers represented by unions. However, certain areas have a higher concentration of business and corporations that need your services, and you can always choose a specialty that is more in-demand in your area.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a contract negotiation service?
In addition to your marketing efforts, try to schedule meetings with different local companies when you first start your business and let them know you would like to assist them if they need you. Try to identify a particular contract negotiating need in your area and consider specializing in it. Finally, make sure to introduce yourself to people at different levels of the company hierarchy when you are working on a contract so they will keep you in mind for future work.
How and when to build a team
Most negotiators start out working on their own. However, if you start regularly having more work than you can process on your own (either in terms of job volume or job complexity), you should consider building a small team to improve workflow and efficiency.