Negotiation is a necessity for any successful business transaction.
Sometimes, the negotiations shape formal affairs with clear objectives. Other times, negotiation in business is a continuous process that develops to suit parties' business goals.
Strong negotiation skills are essential if you are looking for success as a small or large business. Let us go through the top five secret tips professionals use for a successful negotiation.
Importance of Negotiation for Your Business
Negotiation can elevate your stand on the success ladder, and it's also an art. Negotiating allows amplification of the value of your work as a business.
However, it does not benefit a single business or person. The negotiation agreements on any cause address important matters or find solutions to long-standing problems. Successful negotiation can help create relationships today for opportunities tomorrow.
What Are the Basic Business Negotiating Strategies?
Before you step into a business transaction, developing reliable negotiation skills is critical. The first offer you receive is often not acceptable. But committing to a robust negotiation process can make the terms sweeter while taking care of your business's bottom line.
Here are four basic negotiating strategies you should consider.
Aim for a Win-Win Situation
All sides of the bargaining table should leave feeling like they have a win. To achieve this, view your work as a problem-solving role.
Start by asking yourself what the negotiating partners want that you both can have. Next, propose a deal that addresses the needs of both sides for a better outcome.
Set Offer Expiration Date
Give the negotiating partner a deadline to accept or walk away from your reasonable offer. However, the other person may come back with a counteroffer.
But an expiration date will force the other parties to be serious. As a result, this strategy is one of the most effective ones that skilled negotiators use in various stages of negotiation.
Open Negotiations With Lowball or Highball Offers
As the buyer, you know what you can pay, so start by offering half of the amount. The seller will not accept the offer, but you've established a baseline for more negotiation.
This strategy can help you realize a lower price than starting with a more reasonable offer. The strategy also works for sellers. Open with a higher selling price than what you want to accept.
Have a Best Alternative to a Negotiated Agreement (BATNA)
When all sides hold on to their positions, getting a yes can be impossible. A BATNA helps establish rules for what occurs in case there's no agreement.
For example, think of a worker who demands a raise and a boss who refuses. A BATNA resolution may call for the worker to continue working for six months at the current rate, and they can leave.
The BATNA features more trade-offs than a successful business negotiation, but it contains concessions for both sides. In our case, the worker gets six months to search for a better-paying position while the employer has six months to find a replacement.
Do's and Don'ts of Negotiation
Its critical business owners become students of the negotiation strategy. You should pay close attention to these do's and don'ts passed down by experienced entrepreneurs:
- Do set goals
- Do define your thresholds
- Do follow negotiation etiquette
- Don't lose your cool in emotional negotiations
- Don't be intimidated and instead require the other party to support their claims with quantifiable data
- Don't avoid conflict
Top 5 Secret Tips for Successful Negotiation
Negotiation is a must-have skill in the modern business world. You will benefit from learning a few tips successful negotiators use. These five secrets are the key to conducting successful business negotiations.
Build a Strong Personal Relationship
You'll likely not believe a stranger who comes to you with a proposal that will make you 30k in a month. But what if your best friend comes with the same proposal?
Positive relationships engage comfortable feelings, including trust. Whether you have a personal or corporate relationship, the positive relationship influences how others believe you. For example, people are more accepting when someone they believe comes with a proposal.
Have a Contingency Plan
Things may not work as you want, so do a what-if analysis for contingency planning. All you do is gather thoughts on the likely outcomes and create responses for each situation. A contingency plan also reduces the number of surprises you encounter during negotiation.
Talk Less, Listen and Analyze More
Listening or talking more can affect a successful negotiation in business. However, consider finding a balance between the two. The most effective strategy is to spend 30% talking and 70% listening.
Active listening lets you concentrate on what's being said and find opportunities. However, always analyze the facts for better-informed decisions.
Things will not work in your favor in most situations. So don't panic and hurry to shut down the discussion. Instead, remember there is a tomorrow, and things can turn upside down.
Be Realistic About Your Needs and Wants
Your "needs" are essential goals you should achieve. "Wants" are goals that aren't so essential for your business.
Distinguishing both goal types will help you during negotiation. While you can compromise on your business "wants," you can't do the same with the "needs."
Bad Negotiation Examples: Mistakes to Avoid
Now that you know the secrets to successful business negotiation, here are six common negotiation mistakes to avoid:
- Failing to prepare
- Not knowing your BATNA
- Assuming something is non-negotiable
- Focusing on price
- Trying to be the "winner"
- Being afraid to offend
Successful Business Negotiation Examples
Now that you have the skills to negotiate, put them to work and do what's best for your business in these negotiable scenarios beyond your customers:
- Negotiating salary—Over 70% of managers expect salary and benefits negotiations when making an offer to a candidate.
- Lower your bills—If you're looking to boost your online presence, remember that your internet bills are not set in stone. Negotiate your monthly internet bill and get extra change in the bank account.
- Decrease your rent—Landlords use various factors to set commercial rent, such as the current market price, supply and demand, and property market value. Each factor fluctuates, allowing you to negotiate on rent.
Practice to Get Better at Negotiating
Now that you have the tools to become a master negotiator, it's important to mention that building the perfect negotiating strategies will not happen overnight.
These tips work best with constant practice. The key is finding your unique negotiation style, and don't get discouraged if you fail at first—it's part of the learning curve!
About the Author, James Webster
James Webster, founder and CEO of ROK Financial has almost two decades of experience within the financial services industry. His passion for helping small business owners and his innovative way of thinking, has allowed him to run multiple successful businesses including National Business Capital & Services. Under the National name, the team was able to help secure over $1 Billion in financing for small businesses nationwide.