How to become better at business negotiations
Q I ATTEND a lot of business meetings, How can I become better at negotiating with suppliers and customers?
A Negotiation is part of business. Whether your 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 your dealing with - and the industry they're in.
- Learn the main terms and concepts they're likely to use so you're not confused or intimidated by jargon. But if something comes up that you don't understand, ask for clarification.
- Familiarize yourself with their products or services, their industry and their competitors. It will give you a sense of their strengths and weaknesses, and help you predict what's negotiable.
- Understand your position. It's important to know what you bring to the table, and why they might prefer to do business with you. Money isn't always the main factor.
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 your not going to be steamrolled.
3. Know where and how you can compromise: 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.
4. Aim for a win-win: 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. 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.
5. Have a plan B: 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. 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.