Momentum Podcast: 264
Contract Negotiation Hack
by Alex Charfen
Contract, negotiation, hack. If there's one thing in business I absolutely love, it's making deals. There's just something about getting together with somebody, going through the details, putting together a detail … Or sorry, putting together a deal.
And, then going out and making the deal actually produce something. Partnering with somebody, affiliating with somebody, associating with somebody in any way makes me feel excited to be alive as an entrepreneur.
Deals give us the ability to work together and move forward. Let me share with you the biggest hack in negotiating contracts. You might be surprised with just how simple it is.
Full Audio Transcript
I'm Alex Charfen, and this is the Momentum Podcast. Made for empire builders, game changers, trail blazers, shot takers, record breakers, world makers, and creators of all kinds. Those among us who can't turn it off, and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules. But, only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it. We don't understand defeat, because you only lose if you stop, and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority. The few, who are willing to hallucinate there could be a better future. And, instead of just day dreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the Evolutionary Hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent, positive, human evolution. And, we always will be.
Contract, negotiation, hack. If there's one thing in business I absolutely love, it's making deals. There's just something about getting together with somebody, going through the details, putting together a detail ... Or sorry, putting together a deal. And, then going out and making the deal actually produce something. Partnering with somebody, affiliating with somebody, associating with somebody in any way makes me feel excited to be alive as an entrepreneur. There are billions of people on this planet, and every single one of us is different. Maybe that's an indication we should work together to cover each other's deficits, pull out each other's strengths, and help all of us together move forward.
Deals do that. The ability to work together does that. The ability to come to a meeting of the minds, to an agreement and make something happen is how that actually comes to fruition. But if there's something I absolutely can't stand as an entrepreneur, it is contracts. I edited there. I like to keep this podcast clean. But man, if there's anything that I was going to use a bad word around, it would be contracts. Contracts are like ... They are so much a part of what makes business doesn't, not work. And, what makes business frustrating, what makes it difficult, and what makes it harder on us than it should be. Because, the fact is most contracts are really written for the lawyers, they're not written for the people involved.
I've seen simple agreements get turned into 60, 70, 80, 120 page agreements. By the time you're done reading 120 pages, you can't even remember what the deal was at the beginning. It becomes futile and useless. It turns into working for the contract no longer working for the deal. So, I learned a long time ago early in my career that when you start negotiating contracts, the only people who win are the lawyers. 'Cause the second you're negotiating around a contract, the attorney's have to be involved. You have to have somebody tell you all the legal ease, you have to have somebody tell you what it really means, you have to have someone interpret the real language you were trying to use to do a deal, and now turn it into the legal crap that attorney's talk about or use, and make it so that it's a real contract. Here is the ... Or, make it so it's a valid contract.
Here's the biggest contract negotiation hack I can give you. When it comes to making a deal, don't use a contract. This is pretty easy. I know that this is obscene in its simplicity, but it is so elegant in how it actually works. This is coming from someone who's put together literally thousands of contracts. Not hundreds, thousands. My wife and I have bought over 1,000 ... Bought and sold, been involved in transactions on over 1,000 properties. We have bought and sold companies, we have bought and sold domains, we have signed contracts with hundreds of organizations around the world, we've had affiliates, and speakers, and independent contractors. We've helped people grow their businesses, we've had people help us grow our businesses. We've had coaches, we've coached. We've had consultants, we've consulted.
There's been tons of agreements that we've had, but here is a similarity for every agreement that I have ever entered into. It doesn't start with a contract. We just don't use it. In fact, this is the fastest way to negotiate a contract, is not use one. Here's what we do instead. We sit down with the person that we're trying to put a deal together with, and we make a simple terms sheet. One page, what is it that each person really wants? What is it that we want out of this agreement?
We sit down, and we write. We write down the terms. What's the time frame? What are the responsibilities of each party? What expectations do we have of each other? So, that we're hyper clear on exactly what we want out of this deal. We spell out all the details of any detail, or any deal we're going to do together on a simple plain language piece of paper.
We drive it all the way until that piece of paper actually has all the details of the agreement on it, and then we send that to the attorney. In some cases, we don't. I'll share that in a second. Here's what we do in most cases. When we're done with the deal sheet, both parties will actually sign it as an intention like a letter of intention. Then we'll send it to an attorney so that we can get it papered into a contract. But, you know what happens a lot of the times? As soon as we have that deal sheet and we both agreed, we just start working together.
Here's what's happened in some cases. In fact, yesterday I mentioned RE/MAX on my podcast, and I must have Dave Liniger on my mind or something because it came up again while I was preparing the notes for this podcast. Yesterday I shared how when we were working with RE/MAX, we did tens of millions of dollars in deals with them. In fact, at one point Dave jumped on his private jet at his expense, and we flew around the country and promoted the Certified Distress Property Expert Course. Not just to RE/MAX agents, but to any agent who would come and listen to Dave speak. We did all of that to promote my product. He did all of that to promote the Certified Distress Property Expert. He literally sold thousands of units.
Here's what's interesting about everything we ever did with RE/MAX. We did exactly what I'm talking about. We drove to a one page deal sheet. Then once Dave and I had the deal sheet, we just used it. Cadey and I did over 20 million dollars in business with RE/MAX. We did dozens of events. I spoke at their annual conference four, five years in a row. We taught over 12,000, or 13,000 RE/MAX agents. We had a ton of exposure within their network, and we did it all on an agreement that fit on one 8 1/2 by 11 sheet of paper. Had my signature on it, and Dave's signature on it, and had less than 500 words. It was simple. It still is simple. That agreement with RE/MAX survives to this day, and we still do business under that one page agreement.
Now, I'm not saying that everyone you ever do a contract with will allow you to just use the one page. But, when it came to working with RE/MAX, that was the easiest thing for us to do and it worked like crazy. For you on the next contract you negotiate, here's the key. Don't use the contract until you have a 100% meeting of the minds. Get together with the person you're going into this contract with. Understand what they want, understand what you're looking for. Then, make sure that you write that into the agreement before you get your attorney's involved. Have a simple, plain language, one page agreement that you agree on, and that you agree is what you guys want. That will hack your contract negotiation down to a fraction of the time that it normally takes.
The biggest issues with contract negotiations, is the attorney's. See, once you get attorney's involved, it becomes more about the legal aspect of the contract than getting the deal done. It becomes more about protecting everything in CYA, than seeing if you can actually do business. It becomes more about business prevention in the way of liability prevention, than it becomes about growing your company, and growing the impact that you can go have in the world.
When it comes to contract negotiations, the easiest hack is to stop using a contract. Create a simple, plain language agreement. You will save yourself a ton of time, a ridiculous amount in legal fees, and you'll see a lot more deals go through instead of getting killed in the contract prevention department. Or, what I like to call your, "Attorney's desk." The fastest way to hack a contract, is just don't use one. Use a deal sheet instead, and then once you have a meeting of the minds on the deal sheet, you can make a decision. Do you want to just sign that sheet and move forward? Which, in a lot of cases I do because I feel like contracts are worth the person who's signing them, and really not much more.
And so, if I trust a person I'm standing in front of, we'll sign it, and we'll work together just like Dave and I did. It was good for over 20 million dollars in business, it's good for me. If you are in a situation due to the other party, or because you have to, or 'cause you're in a regulatory environment where you actually have to have a contract. That deal sheet will make it infinitely easier to actually create one. Hack your contracts by not using one. It makes things really easy.
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If you don't have one yet, don't worry about it. I have one that's made for you. It's created for the entrepreneurial personality type. Hundreds of entrepreneurs around the world have vetted it, and came back and said it has changed their lives. And, I know it's going to change yours. Morning.Charfen.com.