The negotiation process is one of the most fundamental and terrifying aspects of managing a small business. Whether it’s negotiating with a supplier or getting clients to sign on the dotted line, it’s about getting the best deal for yourself through good communication, honesty, and trust.
Negotiating is not just something that happens “out there” — it is an essential skill that every small business owner needs to practice in order to be successful. The following nine strategies will help you gain the upper hand during negotiations.
- Ask for what you want without hesitation.
Successful negotiators are assertive and constantly challenge the other party. They possess the knowledge that everything is negotiable. The key distinction between negotiators and everyone else on the planet is negotiation consciousness.
Being assertive entails asking for what you want and not taking no for an answer. Practice expressing yourself without fear or rage. Inform people of your desires in a non-threatening manner. Practice making “I” statements. For example, instead of saying, “You should not decide in that direction,” try saying, “I’m uncomfortable with your decision on…”
- Aim high and anticipate the best result.
Optimistic people make good negotiators. You’ll get more if you have higher expectations. You should offer less as a buyer than you are willing to pay. In the same vein, as a seller, you should ask for more than you want to get in return. Higher aspirations produce better results. Your optimism will come true on its own. On the other hand, if you have low expectations, you’ll probably get something that is less satisfying.
- Do your research.
This is what excellent negotiators do. Prior to your negotiation, gather as much useful information as you can. What do they want? What pressures are they facing? Which alternatives do they have? To negotiate successfully, you must do your research. You cannot make informed decisions if you don’t know the circumstances on the other side. You will be more powerful in negotiations if you know more about the parties involved.
- Be prepared to leave at any time.
Never go into a negotiation without any leverage. You lose the ability to say NO if you rely too heavily on the success of a negotiation. The other side can tell you’re serious when you tell yourself, “I’ll leave if we can’t come to a satisfactory agreement.” You might be tempted to concede to the other side’s demands in order to reach a deal if you don’t think about the possibility of walking away.
- Describe how the needs of the other person will be met.
Successful negotiators always consider the other side’s point of view. You will be far ahead of the game if you can determine how they view the deal because everyone has a unique perspective on the world. Instead of focusing on winning the negotiation, try to understand the other party and provide them with solutions that will make them happy. The philosophy of negotiation includes the firm belief that one hand washes the other. If you help the other side to feel satisfied, they will be more inclined to help you satisfy your needs.
- Don’t give anything away without getting something in return.
Making unilateral concessions is counterproductive. You should always expect to receive something in return when you give something away. Always tie a string: “I will do this if you do that.” If not, you are giving the other negotiator permission to demand more concessions from you. They will feel entitled to your concession and won’t be satisfied until you give up. You will give up even more if you give something away without expecting them to return the favour. However, if they have to work for your concession, they will feel more satisfied than if they received it for free.
- Keep the negotiations professional and courteous.
Really, no one wants to do business with someone who is difficult or abusive. After all, you might want to continue doing business with this person after the negotiations are over, or the transaction might call for ongoing communication with the opposing side’s representative. One of the objectives of the negotiation should be to create a positive, long-term relationship. Negotiations are likely to be completed quickly if they are conducted in a cooperative, friendly manner.
- Always draft the first version of the agreement.
A fundamental rule of any negotiation is that the first draft of the desired contract should be prepared by you or your lawyer. This gives you the opportunity to outline the deal’s structure, implement important ideas that you want but haven’t been discussed, and create momentum on your side. Unless it is absurdly one-sided, the other party will be reluctant to make significant changes to your document. Therefore, you will have already gained some ground by starting the conversation on your preferred terms.
You should refrain from starting the negotiations with a proposal that the opposition will never accept. The key word here is balance.
- Ask the right questions.
Don’t be afraid to ask the other party many questions. The replies may provide useful information for the negotiations. Depending on the type of transaction, you might ask:
- Is this the best pricing or offer you can give me?
- What guarantees do I receive that your service or product will benefit me?
- What distinguishes your products from those of your competitors?
- What additional benefits are you willing to include for free?
- What time frame do you have in mind for the transaction?
- How does our deal benefit you?
For small business owners, the ability to negotiate effectively can mean the difference between success and failure in today’s challenging business environment.
As a small business owner, negotiating is one of your most powerful tools. With these nine tips in practice, you can rest assured that your business is headed for success.
Dukka is a leading bookkeeping and payments app. We provide solutions for bookkeeping, payments, cash flow management, and access to finance for small businesses in Africa. We are building an OS for commerce for African merchants.
To learn more about what Dukka is doing or to have a general chat, visit Dukka.com.