Negotiating is an inevitable part of doing business. You negotiate with suppliers, distributors and customers. Good negotiations can lead to prosperity, while bad negotiations can damage your business profitability. Learn more about this important skill and activity.
Before you start
The first step to a successful negotiation is to be prepared.
- Have a plan. Decide on your desired outcome before you negotiate and set your boundaries. It is easy to define your best case scenario, but what is the minimum you are willing to accept?
- Find out what you can about who you are negotiating with. Understanding their situation can give you the leverage you need to negotiate a favourable deal.
- Remember you have more than just money to offer. Other things that can be desirable to offer in your negotiations can include:
- level of service
- payment schedule
- contacts and introductions
- partnerships with third parties
- contract lengths and durations
- expertise and knowledge sharing
Negotiations are usually seen to be confrontational, because each party is trying to get the best deal they can. However, negotiations can be positive. You are building a relationship and perhaps the start of a great partnership. Try to find a solution that works for everyone.
One method of non-adversarial bargaining is principled negotiation. Follow the four steps to principled negotiation:
- Separate the people from the problem - Make the discussion about what is being negotiated, not who is doing the negotiating.
- Focus on interests, not positions - Both sides want something. Focus on the goals rather than on how you want to accomplish those goals.
- Invent options for mutual gain - Do not approach the negotiations with the goal of getting what you want. Make the goal something that benefits both sides.
- Use objective criteria - Base the negotiations on market values or traditional practices rather than on what you think things are worth.
Preparation and planning are not the only elements of smart negotiating. Handling yourself during negotiations is also key. Some things to keep in mind are:
- Emotions - Your emotions can work for or against you. Sending out the right emotional response at the right time can signal your opinion of an offer. This can prompt the person making the offer to make adjustments without your having to make a counter-offer. Too much emotion, on the other hand, can work against you. If you let your emotions guide your negotiation, you could easily accept a bad deal or throw away a good one.
- Patience - No negotiation is so important that it must be rushed. Let the persons you are negotiating with finish what they are saying. Try not to interrupt. This gives the other side an opportunity to make a full offer and it gives you the time you need to fully consider what is being proposed.
- Silence - We are generally uncomfortable with silences during conversations. When there is silence, we want to speak up just to break the tension. However, silence during a negotiation can be a good thing. It gives you a chance to think and compose yourself. Use silence to your advantage.
- Take a break - It is okay to step away from the discussion for a while. A break can give you the time you need to compose yourself or give an offer or counter-offer the thought it deserves. At the very least, a break can relieve the pressure, if you feel you are being pushed into a deal you do not like.
- Walk away - You do not have to make a deal. A bad deal is worse than no deal. If you cannot find a way to get the minimum deal you planned on before sitting down, then get up from the table and walk away. The deal you are looking for can be found somewhere else.
For more information on negotiating and other business topics, contact Canada Business Ontario today. Telephone services are available in English or French.