How to Start a Contract Negotiation Service

Start a contract negotiation service by following these 10 steps:

1. Plan your Contract Negotiation Service
2. Form your Contract Negotiation Service into a Legal Entity
3. Register your Contract Negotiation Service for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Contract Negotiation Service
6. Get the Necessary Permits & Licenses for your Contract Negotiation Service
7. Get Contract Negotiation Service Insurance
8. Define your Contract Negotiation Service Brand
9. Create your Contract Negotiation Service Website
10. Set up your Business Phone System

We have put together this simple guide to starting your contract negotiation service. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

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 will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Contract Negotiation Service Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

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.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your contract negotiation service is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

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!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

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

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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.

Service Agreement

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

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

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.