Where there are business transactions happening, negotiations should be happening. As a business owner, you should not be afraid to negotiate an outcome that serves your best interest. However, negotiation skills are not acquired overnight. As with so many other things, practice makes perfect. With constant application of best practices, you can learn to become an effective negotiator. Below are six steps that can help you improve in the area of business negotiation.
Step #1 – Preparedness
Whether you are a newbie or an expert, preparedness is an integral part of a successful negotiation. The time to prepare is before the negotiation; gather the needed information so you can speak to the topic in an intelligent, informed, and confident way. Before you even attempt negotiations, make sure you have done your homework. You need to know the ins and outs of your particular market, and the specific details of the situation at hand. This will ensure you do not embarrass or discredit yourself. It will also prevent you from inadvertently making a deal that is not in your best interest.
Step #2 – Establish your image
This could be an intimidating task, especially if you are new to the arena and are attempting negotiations with key, experienced players. Your image matters – as in the way you present yourself. Your nonverbal language, your attire, and your general demeanor all make a huge difference in how you are perceived. Remember that genuine people are likeable, and likability goes a very long way. Let your follow negotiator know that you are genuine and that you are interested in a long-term, mutually beneficial relationship. If you work to establish a good image from the start, you increase your chances of finding favorable outcomes for your business.
Step #3 – Don’t talk upfront the price
When starting a negotiation, pricing should not take the limelight. It would be more appropriate to introduce yourself, your business, and what you can offer them. You can also mention names of people belong to your network who can support your credibility. Obviously, the money will need to be discussed, but it should not be the first thing that comes out of your mouth. Remember that cost is not the only factor to be considered when it comes to finding a mutually beneficial agreement.
Step #4 – Be open for other vendors
Like in the game of poker, know when to fold. Part of negotiation is to be willing to walk away. You’re trying to come to something that is mutually beneficial for both parties, and if you can’t come to a compromise, then this isn’t the deal for you. This can be applied to any negotiation – don’t focus on a single vendor or a single offer but be willing to consult with other vendors and entertain other offers. It’s time well spent.
Step #5 – Know what matters most
Before you start negotiating, decide the criteria by which you will make your choice. What is vital to your business? Is it warranty coverage? Timeliness of delivery? Affordability? Etc. If you are particularly concerned with on time delivery, you may be willing to pay a little more if they promise they will adhere strictly to your delivery deadlines.
Step #6 – Offer something to the negotiation
Get creative in what you can offer. Think outside the box, as the rules of negotiation are flexible. It might not be as straightforward as you had imagined; it might not come down to just dollars and cents. People can bring other things to the table, so be willing to entertain their offers. You can offer other enticing options other than money, such as a discount for future services, promises of referrals, or introductions/connections to other power players in the industry.
With enough exposure and practice, you can hone your negotiating skills and become a pro. You may find that the negotiation process will test your patience and knowledge. However, a skilled negotiator is poised to close deals and make connections that will contribute to their company’s success, directly and indirectly.