5 Negotiating Tactics Every Small Business Owner Should PracticeThese expert tips will set you up for success the next time you face off with another party.
Negotiation skills are an essential part of every business owner’s toolkit. After all, you need to negotiate routinely with employees over raises and promotions, with suppliers for prices, and when hammering out partnerships and business deals. Even if you know the basics, here are five less obvious tips from expert negotiators to help you succeed.
Know the value of your relationships
Even the biggest industry is a surprisingly small circle of partners, clients and colleagues. That means negotiations don’t happen in a vacuum, and you’re likely to encounter the same people again and again. Thus, you need to factor the value of your relationship into any deal.
“I was once negotiating with another attorney who seemed to want to win the negotiation,” said Julian Cordero, an attorney at Cordero Law, specializing in business and entertainment law negotiations.
“He flat-out said this isn’t a negotiation, but rather a demand,” which regardless of the short-term outcome, poisoned the relationship.
Cordero emphasized that this kind of hard-driving attitude isn’t smart – everything you do affects future relationships.
“You need to look at the big picture,” Cordero said.
Have a fallback plan
Often, you don’t know what success looks like until you thoroughly understand what happens if your negotiations fail. That’s why it’s critical to know what your best alternative is – called BATNA by professional negotiators, short for “the best alternative to a negotiated agreement.”
If you’re negotiating to renew your lease, for example, you’ll know when to walk away from the deal only if you’ve already investigated alternative locations and know what you’ll have to pay for them.
Make it the other person’s idea
President Harry S. Truman is often credited for saying, “It’s amazing what you can accomplish if you don’t care who gets the credit.”
Whether or not he actually said it, the sentiment rings true, and it’s especially relevant in the world of negotiations.
“Egocentric people love to say no,” said Paul I. Menes, of Menes Entertainment and Media Law.
You can short-circuit this emotional response and have a better outcome by playing a psychological game: Ask open-ended questions that can lead your partner to suggest your desired course of action on their own.
Rather than asking, “Do you have a problem with this proposal?” or “Do you have a better idea?” – both of which can entrench your adversary – Menes said that you should pose questions like, “I’m wondering how we could work out a way to do …”
Foster a friendly atmosphere
Effective negotiations are generally ones in which both parties successfully check their emotions and egos at the door, though that’s often easier said than done. High stakes can amp up anxiety on both sides.
JoAnn Sloan, a business coach and author, described a situation in which she worked with a real estate agent who was negotiating with two parties who had become very adversarial before even starting the conversation. She worked with her client to neutralize that relationship by emphasizing the goals both parties had in common, and stuck to a script that emphasized facts and figures.
End the negotiation with bullet points
How do you make sure you get the deal that you painstakingly hammered out in negotiations? By not waiting to confirm the details.
Be sure to end your session by authoring a final set of bullet points. These should clarify all of the major points that both sides agreed to, and clearly re-articulate information established in prior sessions.
Don’t forget to include how each of the points will be handled by every affected party. If you do it in the room – while everyone is still present and the deal is fresh in everyone’s mind – you can streamline the process of drawing up contracts or agreements, and possibly even save on legal fees, Menes said.