Everyone negotiates. All the time. Everything is negotiable. The start-up founder or small business owner who doesn’t know their source of power in negotiation will set themselves up for giving away more than they bargained for.
As a small business founder, no matter the size of your business, you are going to encounter negotiation in many areas. Even at the early stages if you are bringing someone to develop your prototype, you will need to negotiate. You might need a business adviser – again you will need to negotiate because business advisers don’t come cheap. Then there are suppliers with whom you need to negotiate prices and payment terms. What about larger customers? Before you can blink your eyes, large customers may get away with prices and terms favourable to them. Other areas of negotiation that are critical include negotiations about licensing and franchising, for example.
Dr Chester L Karrass, who runs one of the world’s leading negotiation programs, has practised negotiation for decades and has done academic research into negotiation leading to his Ph.D, offers some of the mistakes he’s made over the years. Mistakes, he says, rob you of the bargaining leverage necessary for effective negotiations. One of them is when you underestimate your power. He says most people tend to have more power than they think. Only by making a systematic analysis of power can you understand your strengths.
“Your base of power rests on a foundation of more than just competition or financial matters. Commitment, knowledge, risk-taking, hard work and negotiating skill are also real sources of power,” he says.
Another mistake is to assume that the other party knows your weaknesses. Assume they do not and test that assumption. You could be better off than you think. Another area I find important is to not be intimidated by status. As Dr Karrass says, we are accustomed to showing deference to titles and positions and we carry our attitudes to the negotiating table. It’s good to remember that some experts are superficial – some people with Ph.D.s quit learning years ago; some people in authority are incompetent, the specialist may be excellent in their field but without skill in other areas; and some learned people, despite high positions of power, sometimes lack the courage to pursue their convictions or have none.
Other sources of competitive power include people who intimidate you with statistics, precedents, principles or regulations that may no longer be relevant. It’s critical that you challenge them. Dr Karrass says that we should remember that the other party is negotiating with you because they believe they have something to gain by being with you. “You may discover that the negotiation, no matter how small it is, is part of a larger framework in the other party’s objectives. This alone may provide you greater bargaining power than is apparent from the situation.”
Of course, not every start-up founder or small business owner feels comfortable launching into a negotiation. If that sounds like you, you are not alone. But don’t let your fears stop you from understanding sources of power in negotiations because the more you know about power, the stronger your position.
In the programme “Breakthrough Ideas” I teach you ways to negotiate from a position of strength and give you techniques and methods learned from some of the top negotiators in the world including Dr Chester Karrass that can strengthen your negotiation position. One simple principle can save you thousands.
Trek over here for”Breakthrough Ideas”
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