Business negotiation is critical to the success of a company. Good negotiation can give you better deals, but poor negotiation can even cripple a company, and you can lose key customers. But many entrepreneurs are still apprehensive to negotiate.
Salary.com conducted a survey of 2,000 people and found out that 87% of the 2000 people are hesitant or have serious reservations about negotiating. Only 37% of people have tried to negotiate their salaries while the 18% who don’t miss out on more than $500,000 by age 60.
Every transaction involves a certain amount of transaction, and many people do not know how to go about it. The following list will unlock your ability to get the best possible deal when negotiating in business –
1. Know What You Want
You need to know specifically what it is that you want from the transaction. This is an important aspect of negotiating. If you don’t know what you want, you are in a bad place because you could end up with anything, and sometimes even worse than what you expected.
Be very specific and know exactly what you want before you approach someone for a deal. According to a 2015 LEVO report, 56% of the respondents who negotiate do not know what to ask for. They may even end up with a good deal, but it is something totally different than what they initially wanted.
2. Prepare for the Negotiation Meeting
A very good thing that you can do to yourself before you go to the negotiation meeting is to prepare yourself as much as you can. Preparation gives you the information that you need to get the best deal. If you approach without the sufficient information, the other party may use your lack of knowledge to gain the upper hand in the negotiation process.
The LEVO report also found out that lack of necessary information is the primary reason for which as much as 58% of people hesitate to negotiate. Ultimately the negotiation meeting ends unsuccessfully. Therefore the most important thing is to do be well-prepared by doing proper research of what you are negotiating for and also be reasonable in your dealing. An unbelievably unreasonable offer will get turned out even before the negotiation goes anywhere.
Also remember to negotiate with the right person who has the power to authorise a deal with you. Your time is precious, and you don’t want to spend it convincing someone who tells you at the end that they have to converse it with their boss.
3. Have a Negotiation Strategy
Before you go to the negotiation table, you should have your negotiation strategy ready to work accordingly. Several business management websites offer useful guidelines on effective negotiation strategies. A negotiation strategy generally starts with an opening offer, and this is very crucial because it sets the benchmark for all subsequent offers. Therefore, be assertive and reasonable when making the offer also because your negotiating counterpart will judge you based on the offer you make.
Your offer can either get accepted or rejected by the other party. They may even ask you to come with a better offer, but you should never accept such a proposal. It will put you in a situation where you will be forced to lower your offer until they are satisfied even before the offer gets on the table.
It is also advisable not to reveal your budget or any constraints you are facing when you are negotiating. The other party may take it as an advantage and rearrange their sale specifications to meet your budget by offering you a product of low quality which was not what you wanted.
4. Leverage Your Advantages
Make full advantage of any leverage that you might think you have over other party. Say, for example, if you are a mass purchaser of raw material from a supplier, remind your other party of the frequent profit they will make from you on that deal.
If you especially have a market influence over other businesses that will need the same raw material, remind the seller of the many other businesses that will flock to them when word gets out that you are using their product or service.
5. Focus on the Other Party’s Pressures, Not Yours
You have to avoid the most common mistake that people make when negotiating – focusing on why you need the deal. Shift your focus on why they need the deal more than you. This will give you the power to set the scales.
Tell the other party how the deal is going to benefit them. Find out the pressures that the other party could be facing, like a high supply of their product than the demand in the market currently. How badly they will lose if they don’t make the deal etc. focus on that and present it firmly to the other party until they take the deal.
6. Present a Win-Win Situation
Listen carefully to the other party and work on to find an acceptable deal for them. Recognise their priorities and try to accomplish those at the same time satisfying your main priorities. Work in a way that makes everybody wins.
Remember, your goal is to get a good deal but not at the expense of cheating the other party. If you cheat the other party, you will come around as a deceitful and ruthless person, and they may never want to work with you again. Forbes contributor Keld Jensen’s research with Market Watch Centre for Negotiation found that negotiators get 42% more value when they create a trustful and collaborative relationship that benefits everyone.
7. Close the Deal
As we discussed earlier, know what you want and when you have that in mind and when you reach that point, be swift and close the deal. When you are at the negotiating table, each of your moves matters as it will influence the next one. So always be alert and keep a sense of timing throughout the process. Be ready to compromise at times, but at the same time be ready to walk away if the deal is not worth it.
In business, you get what you negotiate and not what you ask for. So you better be prepared by learning the key negotiations techniques mentioned above and be ready to execute your next negotiation successfully.
Founder of BusinessBoost.xyz
Award winning author | Serial entrepreneur | Business coach