Successful business people don’t reserve their negotiating skills for the really big events and agreements only. They know that each aspect of running a business includes opportunities to strike a great deal.
Expert negotiators suggest honing and using your deal-making talents for routine, small purchases. You will not only save your company money, but also give you needed practice for the times the stakes are higher, such as: negotiating your next office lease or purchase, lining up big distribution deals, associating or merging with other businesses, or signing a major contract.
Here at our law firm, we know from experience that successful negotiating often depends on following a few basic rules and these are our favorite negotiating tips:
Information Leads to Success
Information is power. This is true with most aspects of business, but is particularly important in connection with being an effective negotiator. Before the negotiation, do your homework and and collect as much relevant information as possible about the object of the deal as well as the other negotiating party.
Negotiation expert and author Ed Brodow explains: “Shut up and listen . . . Negotiators are detectives. They ask probing questions and then shut up. The other negotiator will tell you everything you need to know – all you have to do is listen.”
Learn about the other side’s needs, pressures, options, and all of the circumstances that will play into how they negotiate and conclude a deal. “Show the other person how their needs will be met.” says Brodow.
Find out about the other negotiator’s personality and temperament. Each situation is unique; each negotiator is unique. The approach you took on your last deal may be entirely counterproductive in your next deal. Don’t let the other person’s rude personality or bad behavior get to you. It’s really not relevant to the deal, and often can distract you from an impassive conclusion.
Successful negotiators who are trying to sell items or services know they should open with a number higher than they expect to receive. Conversely, negotiators who are buying generally start out with an amount lower than they expect to pay. This is not only customary in negotiations, but it’s the best formula to achieving what you actually want to receive out of the deal. If you approach the deal timidly, it’s likely you will conclude a deal with a less than favorable outcome. The old expression “If you don’t ask, you don’t get,” is absolutely true.
Always Get Something in Return
A successful negotiation should be a win-win. If you concede certain points without receiving something in exchange, that will set the tone – a bad one – for the remainder of the negotiations. The other side will demand more and expect you to concede more. Once that ball gets rolling, it’s hard to stop it, turn it around, and steer a course towards a mutually beneficial outcome.
Know When to Walk Away
Probably, the worst way to enter any negotiation is if you have no options – if you really need the deal. Try to avoid this situation at all costs.
Assuming that’s not the case, then be prepared to walk away from an offer to make a deal. That doesn’t mean you should end negotiations on a whim, but if you show that that you will make a deal at any price, the other side will see this weakness, and exploit this vulnerability. On the other hand, if you demonstrate that you can leave and NOT make the deal, the other side will sense your strength, and negotiate accordingly.
In sum, negotiation is a skill that needs to be practiced on a regular basis. Negotiating well is important not only for each deal, but contributes to the overall success of your business.