Negotiation Skills: 7 Tips on How to Negotiate in Business
When you own your own business, you will need to wear a negotiator’s hat more often than you might think. You’ll start by negotiating a lease unless you work from home, and then negotiations will be a part of your everyday tasks as you deal with vendors, employees, and customers. For example, when you hire your first employee, they will likely try to negotiate their salary. Customers will attempt to negotiate a better price, and you should always try to negotiate lower prices with your vendors.
And if you can’t negotiate effectively, it will ultimately hurt your bottom line.
That’s why today’s blog post is designed to teach you 7 ways you can improve your negotiation skills.
1. Don’t Go in Unprepared
Negotiations are all about solving a problem that one or both of the parties have, and unless you understand that problem before beginning negotiations, you aren’t likely to come out ahead. For example, if you are negotiating with a vendor for a better discount and payment terms, you will need to go into the meeting with your current terms and what you want to walk out of the meeting with. This is called your target point or ideal solution. In this case, you could ask for an additional 10 percent discount and 30 days rather than 10 pay to pay invoices.
In addition to a target point, you should also have a firm minimum acceptance point—and don’t waver from it. Use hard numbers to arrive at this point and know that you won’t accept anything less. For instance, you might accept an additional 7 percent discount with a 20 day terms limit, but that is the least you’ll agree to.
2. Walk in With Confidence
The first thing the other party will do is look at your demeanor when you walk in the door. He or she will want to determine if you’re anxious, nervous, fearful, or timid. If they can sense any of these in you, they will quickly gain the upper hand in the negotiations.
On the other hand, if you walk in confident that your position is based on facts and is reasonable, they will sense that, too.
3. Listen to Your Opponent in Order to Gain Insight
Remember, you’re not the only person in the room who has an agenda, and if you can understand your opponent’s goals, you will be better able to present solutions that he or she may agree to. And the key to understanding your opponent is to listen to what they say.
Don’t be the first to talk or talk over your opponent to get your point across. Instead, ask questions in order to gain insight about what he wants and expects from the deal.
4. Don’t Try to Please Your Opponent
Sometimes you may have an emotional attachment to your counterpart and that can spell trouble in negotiations. For example, your best employee may be negotiating for a raise, and while you want to be fair, it would be easy to give away too much in an effort to please her.
Instead, remain neutral during negotiations and focus on working toward a solution that will benefit both of you. For example, instead of agreeing to the 30 percent raise she’s asking for, you could offer her a 15 percent raise and an extra 2 weeks of vacation time instead.
5. Don’t Make Assumptions
Even if you done your research and have a pretty good idea of what your opponent wants, you’ll still need to ask questions during the meeting to confirm it. Remember, unless you begin negotiations with a firm idea of what the other side’s goal is, you won’t be able to find a solution that works for both of you.
6. Don’t Only Focus on Yourself
As I mentioned above, the ideal solution is one that meets everyone’s expectations and target points. A successful negotiation includes compromise, and benefits both parties, not just one.
If you walk into a negotiation concerned with only yourself, the other party will sense it and put up a wall immediately. Instead, focus on your target points, and at the same time, take your counterpart’s needs into consideration. The perfect outcome is one where both parties walk away feeling good about the results.
7. You Need a BATNA
A Best Alternative to a Negotiated Agreement (BATNA) allows you to compare a proposed offer against your best option. Remember, you need to walk in with a target point—your best case scenario—but you’ll also need to walk with an alternative plan in case the negotiation fails. Then, once an offer is on the table that falls short of your target point, you can compare the offer to your BATNA and choose the one that best suits your purposes.
For example, let’s imagine that the employee who is asking for a 30 percent raise won’t agree to your proposed solution and refuses to budge from her request. Before you went into the negotiation, you created a BATNA and determined that a 30 percent raise would make her a liability to your company’s bottom line. When she won’t accept your offer of a lesser raise, you look to your BATNA and determine that you cannot meet her request so don’t agree.
If you hadn’t run the numbers beforehand and created your best alternative, you might have given into emotion and come to regret it later.
Of course, it won’t hurt to take some free online courses that will help in your negotiation skills. The Art of Negotiation is a good one, and it’s presented by a Stan Christensen of Arbor Advisors. In addition, the University of California offers an online course by the same name, and The University of Michigan offers an online course called Successful Negotiations: Essential Strategies and Skills.
Do you have any negotiation skills that helped you reach a goal in the past? I’d love to hear about them in the comments below!