Negotiation is part of business. Whether you’re the supplier or the buyer, it pays to know how to do it. The good news is that you don’t have to be nasty to be good. Negotiation is a world of contradictions. You’ve got to be firm but flexible. Open and sharing, but a little cagey. Always aim for a mutually beneficial outcome and you’ll find the whole exercise more comfortable.
Follow these five tips to prepare for your next negotiation.
1. Research – Do your homework
Before starting business negotiations, always do your research. You should come to the table understanding as much as you can about the company you’re dealing with – and the industry they’re in.
2. Don’t be anchored!
Being the first to say a number can be a good way to take control of a business negotiation. That first figure often becomes a reference point for the rest of the conversation.
Some negotiators will open with an extreme number – either very high or very low. They’re hoping the other party will be anchored by it.
If you find you have to move someone a long way from their original position – and that makes you feel uncomfortable – you’ve been anchored!
This can be a confronting tactic and it may not suit your personal style but – even if you don’t want to try it – you should be aware of it when someone tries to anchor you. If that happens, don’t feel awkward about saying you’re a long way apart. It’ll send the message that you’re not going to be steamrolled.
As a small business owner, you may need the deal more than your negotiating partner. Be realistic about that.
Decide what you need from the deal to make it worthwhile and be prepared to compromise on everything else. You can do this strategically.
Identify opportunities to give way on your least-valued terms and communicate it clearly when you do. Don’t whine about it – just make sure your negotiating partner can see you’re moving. They’ll be more likely to reciprocate with their own concessions.
Negotiating isn’t about trying to dominate an opponent. This is business – you’re trying to find a profitable outcome that benefits everyone. Treat it that way.
A win-win mentality is scientifically proven to enhance business negotiations. When people are cooperative, their brains release oxytocin – a hormone that makes them trusting and sharing.
On the other hand, a person who’s losing an aggressive negotiation feels attacked and their brain releases cortisol. This makes them negative and potentially resentful – which harms the chances for repeat business.
What happens if you both walk away from the deal? Figure out what you’ll do if business negotiations fail and ask if you can live with that outcome.
This exercise will help you decide how hard you negotiate. If you don’t have a strong position, you need to be realistic about it from the start.
Having a plan B also means you can keep moving if negotiations hit a snag. You’re never surprised. But once you have a plan B – keep it to yourself. If the other party knows too much about your alternatives, they’ll know how much they can push you.
Practice makes perfect with business negotiations
Negotiation can be tricky, as you meet many different personality profiles, which is why you need to find a negotiating style that suits your personality. As long as you know the strength of your position and respect the other party, your off to a good start. Make mental notes of what works and what doesn’t and remember practice makes perfect for better business deals.
For more information on how to become a better negotiator, contact Paul Redmond on 053 9170507 or email paul@rda.ie