As a small business owner, negotiation skills are one of the most important skills for success, and also one of the most overlooked. It is not a skill that is typically taught in formal education, but gained through effort and experience. And in business, almost everything is up for negotiation. Without proper negotiation skills, you will leave money on the table, lose important deals, or perhaps make deals that do not serve your business. Follow these 5 tips to hone your negotiation skills!
Plan and Prepare When it Comes to Your Negotiation Skills
Know your playing field and what your competition has to offer and for what price. Understanding the intricacies of the alternatives will help you to value your deliverables. Write an agenda that includes discussion topics to keep everyone on track. Be sure to set your objectives clearly in your own mind, and take note of what your acceptable minimum outcome is, along with your ideal outcome. Rank and value your issues and take note of what you are willing to let go of. Think about the many possible options and outcomes that may arise from the negotiation. Going over these options in your mind ahead of time will help you stay calm, confident, and focused during negotiations.
Tune into the Why
Understanding the other party’s why will help identify their real needs and how to best serve them. Don’t be afraid to ask lots of questions, and be sure to actively listen to their responses! Pay attention to what your real needs are too. Be honest with your opponent about your why, so that you can create a win-win solution. In an ideal negotiation, you are able to concede on items that mean little to you, and give items that mean a lot to the other party.
Set the Anchor
Now that you have researched and prepared, be confident in making the first offer. Choose an aggressive one but be prepared to compromise. One rule of thumb is to make an offer that asks for 20% off, and accepts 10% off. Studies show that the final outcome is heavily affected by the initial offer, so use that to your advantage. If your initial offer is too conservative, you won’t have room to make concessions and play the game. You will be stuck refusing their counter-offers and it will be challenging to arrive at a solution. And it turns out everyone feels more satisfied with a deal if they had to bargain for it. So always leave room to bargain. Even if your opponent makes an offer that matches your ideal offer, be sure to allow for a little back and forth so that both of you feel accomplished.
Use Positive Communication When Using Negotiation Skills!
Use a calm and confident tone, paired with positive body language. Remember to separate the people from the problem, and avoid getting angry or frustrated. Be sure to clearly communicate your goals, your offers, and what you expect in return. Being clear and honest is the best way to connect with your opponent and reach a mutually beneficial solution.
Good negotiation skills results in both parties feeling satisfied and ready to do business again in the future. Actively listen to the other party and be flexible and creative with your solutions. Keep in mind that reaching a good deal today also means the possibility of future deals.
Your business will have to interact and negotiate with other businesses as well as clients. You can’t avoid it. The ability to negotiate a good deal that serves all parties involved will determine your success and longevity as a small business. Follow these techniques to build stronger relationships, deliver quality solutions, and avoid future problems!