One asset that all business people need to possess is the ability to negotiate. This could be for price reductions from a supplier, contracts with other entrepreneurs, job offers with employees and so on. Equally, the process could involve multi-company mergers or just targeting new clients. Negotiation is an important part of everyone's daily life although the consequences in business can have far more ramifications. Negotiation training is required if you want to land the best deals. Here are 10 simple principles to follow when negotiating; these should allow business people to come to a satisfactory arrangement:
1. When should you say 'yes'?
It's never a good idea to say 'yes' to a first offer because it's not made to be accepted and a skilled negotiators knows that very well. Saying ‘yes’ demands a lot of work; after an initial offer was made, negotiations are in order, and after all the parties involved have made concessions, the negotiation ends with an agreement. No one expects the first offer to be accepted, so you shouldn't worry that it's 5 times bigger than you anticipated.
2. Ask for more
At the other end of the scale, whether you state your terms first or second, always ask for more than you expect to get. If you are lucky you might get the high-end offer but more importantly it will give you the room to negotiate on the deal.
3. Have a reaction
When negotiating, reactions can have a great impact on opponents. Use your facial expressions to mimic sentiments of shock, amazement or surprise. This will send a signal to counterparts, and they may choose to modify their initial offer. Having a reaction states you wouldn't work with them under those terms and may embarrass them into offering more than they intended.
4. Play the reluctant buyer
There are three stages to ensuring you extract the best price from a supplier. Firstly, you need to listen to their proposal and ask as many questions as you can think of. Examine every detail. Secondly, you must look ready to walk away. State that the deal is not really what you were looking for but that you appreciate the time and effort they have spent. Finally, as they pack up and are about to leave, asking them about the lowest price they would have been prepared to take. It could be what you were looking for!
5. Be brief, then make a pause
This technique is simple but it goes straight to the point. Listen to an opponent's proposal; then simply tell them they will have to do better than that. The trick here is to not say anything further and make a huge pause. Usually, the next person to talk is the one who will give something away to clinch the deal.
6. Concessions
Never give something up in negotiations without getting something equally valuable in return. That's how smart concessions work in business. One concession equals another and plays to the strengths of everyone involved in the negotiation.
7. Ultimate decision-maker
To avoid making a decision and persuade a counterpart to come up with a better offer, you could bring into the deal "a third party". This could be an imaginary boss with the power to accept or decline the current deal on the table. This approach could influence the other side to rethink their offer, and maybe come up with better terms.
8. Splitting the difference
Splitting the difference is usually the result you are aiming for. However, if you ask questions such as "what can we do to close the difference?" you will put the emphasis on them to suggest meeting halfway. Afterwards, it you reluctantly agree, they preserve the perception they've won.
9. Good cop/bad cop
If the party you're dealing with is made up of two people, they may try this approach. One is sympathetic whilst one is unyielding. Their real aim is to throw you off balance and make you agree to something you wouldn't have otherwise. Stay focused! The good cop/bad cop tactic can be extremely dangerous in business negotiations.
10. Walk away
Not every negotiation can end with a mutual agreement, and in certain circumstances you will have to walk away. When the final deal proposed by opponent is not beneficial for your company, it's best to say 'no' and move on. Still, do it politely and leave room for further negotiations.
1. When should you say 'yes'?
It's never a good idea to say 'yes' to a first offer because it's not made to be accepted and a skilled negotiators knows that very well. Saying ‘yes’ demands a lot of work; after an initial offer was made, negotiations are in order, and after all the parties involved have made concessions, the negotiation ends with an agreement. No one expects the first offer to be accepted, so you shouldn't worry that it's 5 times bigger than you anticipated.
2. Ask for more
At the other end of the scale, whether you state your terms first or second, always ask for more than you expect to get. If you are lucky you might get the high-end offer but more importantly it will give you the room to negotiate on the deal.
3. Have a reaction
When negotiating, reactions can have a great impact on opponents. Use your facial expressions to mimic sentiments of shock, amazement or surprise. This will send a signal to counterparts, and they may choose to modify their initial offer. Having a reaction states you wouldn't work with them under those terms and may embarrass them into offering more than they intended.
4. Play the reluctant buyer
There are three stages to ensuring you extract the best price from a supplier. Firstly, you need to listen to their proposal and ask as many questions as you can think of. Examine every detail. Secondly, you must look ready to walk away. State that the deal is not really what you were looking for but that you appreciate the time and effort they have spent. Finally, as they pack up and are about to leave, asking them about the lowest price they would have been prepared to take. It could be what you were looking for!
5. Be brief, then make a pause
This technique is simple but it goes straight to the point. Listen to an opponent's proposal; then simply tell them they will have to do better than that. The trick here is to not say anything further and make a huge pause. Usually, the next person to talk is the one who will give something away to clinch the deal.
6. Concessions
Never give something up in negotiations without getting something equally valuable in return. That's how smart concessions work in business. One concession equals another and plays to the strengths of everyone involved in the negotiation.
7. Ultimate decision-maker
To avoid making a decision and persuade a counterpart to come up with a better offer, you could bring into the deal "a third party". This could be an imaginary boss with the power to accept or decline the current deal on the table. This approach could influence the other side to rethink their offer, and maybe come up with better terms.
8. Splitting the difference
Splitting the difference is usually the result you are aiming for. However, if you ask questions such as "what can we do to close the difference?" you will put the emphasis on them to suggest meeting halfway. Afterwards, it you reluctantly agree, they preserve the perception they've won.
9. Good cop/bad cop
If the party you're dealing with is made up of two people, they may try this approach. One is sympathetic whilst one is unyielding. Their real aim is to throw you off balance and make you agree to something you wouldn't have otherwise. Stay focused! The good cop/bad cop tactic can be extremely dangerous in business negotiations.
10. Walk away
Not every negotiation can end with a mutual agreement, and in certain circumstances you will have to walk away. When the final deal proposed by opponent is not beneficial for your company, it's best to say 'no' and move on. Still, do it politely and leave room for further negotiations.