Following up on my blog posting earlier this week on how the Bad Economy Presents an Opportunity to Renegotiate Contracts, I came across today a timely article addressing the same issue by The Wall Street Journal.
According to The Wall Street Journal, small businesses are having a lot of success in renegotiating contracts in the current bad economy.
The Wall Street Journal reported:
The economic downturn is prompting business owners -- by necessity or by opportunity -- to re-examine contracts with suppliers, vendors or landlords and come up with creative deals. And in many cases, they are saving a substantial sum of money. . . .
In a survey released in September of more than 1,000 small-business owners and managers, about 15% had recently renegotiated long-term fixed-cost supply contracts, according to the Small Business Research Board, a Buffalo Grove, Ill., publisher of the Small Business Confidence Index, which tracks overall business confidence and issues of small-business owners and managers.
This article just reaffirms my earlier point: businesses should review all of their contracts in this economy, particularly the most expensive ones, and consider whether renegotiation makes sense. While a business may feel obligated to fulfill the earlier terms agreed upon at its own peril, the reality is that both parties win if they are able to both stay in business and continue their relationship. No company can afford to lose customers in this kind of economy.