Negotiations 101 – Getting the most out of your business negotiations
No matter what their chosen business or industry, most business owners today spend a great deal of their time negotiating. These negotiations include everything from customer and employee agreements to vendor, service provider, and other key stakeholder negotiations. There is no way around it, success in business in many ways is enhanced or hampered by the business owner’s ability to negotiate effectively. Moreover, your personality and demeanor during negotiations can make the difference between establishing a long-standing business relationship or end up in a one-off or failed transaction or at the worst a dispute.
A common early mistake to make is to think you need to make sure you explain yourself and persuade the other party to see things your way. In fact, it may be much more effective to enter negotiations with the intent to listen to and focus on what the other party is thinking. By better understanding who and what the other person wants and where they are coming from (on both a personal and business level) you could be in a better position to achieve the kind of mutually-beneficial interest-centered results in your negotiation that will enable your business to develop the kind of long-term relationships any business needs to survive in modern, competitive, dynamic markets.
Some Basic Negotiation Advice for New Business Owners
It’s hard to be successful at negotiating without a strategy.
Your starting offer will become the standard for all ensuing offers. Here are some things to keep in mind as you formulate your strategy:
- If you don’t ask for it, there is no way you are going to get it. But, be realistic in your business negotiation. Some negotiations require an aggressive position from the start. Know who sits across from you and what they want versus what they truly need. Your approach to each individual negotiation is as important as your first offer. Ensure you get what you need and reach for that which you want.
- Included in things that you want in your negotiations are things that you can give away without damaging your real needs. Your initial positions may include items that are nice but not essential, or any extras that may end up never being needed.
- Make sure you are ready to stop negotiations if it becomes clear you will not get what you want. Always be ready to walk away. Desperation in a negotiation can defeat your ability to get what you need. Moreover, your counterpart can generally sense desperation. If you are in danger of negotiation by reaction, consider taking a break for coffee or a couple of days until you can instead engage in an interest-based discussion.
- Be creative and allow your negotiation to evolve. As you listen and learn more about the other party and their actual business needs and desires you are better able to steer the negotiation toward a win-win strategy for all.
Don’t talk too much.
This may seem simple, but it’s still important to keep in mind when negotiating contracts. The more you talk the less you listen. If a party has said, “yes,” then you don’t need to say anymore and, in-fact, shouldn’t. Remember, once something is said at the negotiation table, it cannot be taken back and cannot be un-heard.
Use Your Influence Effectively
Consider what leverage you have. If you are the sole source of a service or product, you have a great deal of leverage. If you are just one of many bidders in a competitive market, not so much. A great way to increase your leverage is to establish your expertise on the subject matter. Consider the context of your negotiating position, all the factors influencing your position in negotiations and the factors influencing the person on the other side of the table. Use that knowledge wisely. Listen, listen, listen! Many times, the person talking the most perceives himself or herself (or is perceived by others) to be the “smartest” guy in the room. Many time, the “smartest” guy in the room, isn’t!
These are just a few basic tips to help you get started with your negotiations. If you have any additional questions about business negotiations or other related legal issues, call Stephen Rizzieri at 214.434.1017 or fill out the form on our law firm site today.