Top negotiators keep their best methods tucked inside their wallets. They may dish out occasional pearls of wisdom with an *ahem* delectable price tag at conferences and seminars. But most of us have to learn in the trenches like everyone else.
What does a small business, entrepreneur or startup need to know about negotiation?
Negotiation is a give-and-take process between two or more parties who want to reach an agreement or resolve a conflict.
This sounds like a dry dictionary definition. But we need a place to start. What an agreement implies is that it should be acceptable to both parties. And if it isn’t? Well, either party has the veto or right to say no to a proposal or decision.
Small business owners are faced with negotiations ranging from buying goods and services, office and capital equipment, rental and leases and even in some cases selling equity to raise money.
When the wizards talk or write about negotiation, it can become so long-winded, unnecessarily technical and downright boring that I don’t want to make the same mistake here.
Let’s be brief:
Basically, two parties want to exchange something between them in a mutually acceptable way. Each person has interests and each interest can become an issue to be discussed. You can break down each issue into a tradable range. What do I mean by this? Take a purchase of a product or service from one of your suppliers: the price is an issue with a tradable range starting with your lowest point and extending to the supplier’s highest point. Finding the happy middle price (“split the difference”) is hardly ever a solution that is fair and equitable. Other issues usually need to be negotiated as well. This is why we say in negotiation: nothing is agreed until everything is agreed.
Other issues could be the delivery date, payment terms, exposure that the purchaser will provide for the merchandise, returns policy, slow-moving stock and even poor administration. In heated encounters, long-standing issues that have built up over time may also be placed on the negotiation agenda.
Negotiation requires listening to the other party, understanding what they want and continually making tentative proposals on each issue.
Some business people are fascinated with shyster tactics and power plays such as “throwing garbage on their lawn”, nibbling, good guy/bad guy, the blowup, the flinch, the bogey and the Krunch. Fascination with these ploys is strange because as soon as you recognise these underhand tactics, you can easily disregard them. As negotiation expert Gavin Kennedy says “a tactic recognised, is a tactic disarmed”.
Try to see the other party’s point of view – what are their interests and possible negotiation range? Through non-defensive, open questions you can find out what they have on their chessboard – their strengths, weaknesses, available resources, vulnerabilities and bluster.
Each issue has to be discussed and bargained until agreement is reached. Only agree when you are comfortable that you are satisfied with agreement on all issues.
Otherwise, walk away.
Tomorrow is another day with new opportunities, new deals and possibly negotiators who aren’t out to chisel away your last cent.
PS If you want to know more about how negotiation can help your business, let me know.