The Art of Business Negotiation
Negotiation is an essential skill for one’s life and career, the art of negotiation helps us view negotiation not only from the perspective of something that can be learned but also as something that can be honed through experience. The art of business negotiation is of critical importance, giving your business an advantage in the corporate world. At the very least, you should be able to negotiate an agreement that does not place you at a disadvantage.
Many individuals feel that discussions must be “all or nothing,” with one winner and one loser. This could not be further from the truth. While gaining what you want is clearly the purpose of negotiation, the best deals combine terms and ideas from both parties. Let’s look closer at the art of business negotiation.
Before you read any further, you might be interested in reading, “How to negotiate a business deal.”
Prepare Well
No soldier goes to war without a rifle and ammunition. Preparation is one of the most effective negotiation methods available. Perform background research on the person with whom you’ll be negotiating, including information on the organization they’re representing as well as information on previous transactions they’ve completed. Whenever feasible, seek out peers who have previously negotiated with the same individual or group in order to acquire insight into what to expect during the negotiation.
Listen Carefully
Some of the worst negotiators I have encountered are those that dominate the dialogue, appear to want to control the debate, and lecture incessantly on the virtues of their position. They are the ones that actually listen to the other side, understand their primary issues and hot buttons, and then craft a suitable solution to each one of their demands. Consider what is important to the other side, what limits they may have, and where they may be able to be more flexible. Keep your conversation short and to the point.
Win-win is Always the Best Outcome
In a successful negotiation, both parties walk away from the table feeling as though they have won. Negotiators who are successful see their work as a problem-solving exercise in this manner. Consider the following questions: What do I want, and what does my negotiation partner desire that neither of us currently has? Then provide a solution that meets the needs of both parties while also producing a better outcome.
Be Professional and Courteous
Nobody really wants to conduct business with someone who is tough or harsh in their manner or demeanor. In the end, even if the discussions are over, you may wish to continue doing business with this individual, or the transaction may necessitate continued interaction with the representative of the opposing party. One of the objectives in the negotiation process should be the establishment of a good long-term connection. Negotiations that are collaborative and positive in tone are more likely to move to a successful conclusion.
Open Too High or Too Low
If you’re a buyer and you already know how much you’re willing to spend, you can start by giving half of what you’ve determined you’ll pay. Even if you are certain that the seller will never accept your offer, you will have established a reference point for future negotiations with him. When you use this bargaining strategy, you may be able to get a lower price than if you had made a more acceptable offer to begin with. If you’re the seller, you can use the same strategy: Begin by offering a selling price that is more than the lowest amount you are willing to accept.
Understand the Dynamics
In any negotiation, it is critical to understand the dynamics of the contract. As a result, be prepared to make the following decisions:
- What kind of time constraints is the other party subjected to?
- What alternatives does the opposing party have in mind?
- Who has the most negotiating power in this situation?
- Who is most eager to close the deal?
- Is it likely that the other party will receive a big sum of money from you? If this is the case, you will have an advantage in terms of leverage.
Use Mirroring Techniques
The notion of mirroring is frequently emphasized in professional negotiating training programs. Mirroring is the act of repeating significant phrases used by your counterpart during a negotiation. When you’re repeating words that your rival has just said, this method can be particularly powerful. By mirroring, you can demonstrate to the other side that you are paying attention to what they are saying and that you are taking their points of view into careful account.
Embrace Alternatives
If both sides are adamant about their positions, one or both parties may find it impossible to reach an agreement. The best alternative to a negotiated agreement (BATNA) specifies what will happen if there is no agreement. For example, if a worker asks on a raise to stay in their job and their boss flatly refuses, a BATNA resolution can call for the person to stay on for another six months at the present rate before leaving. While a BATNA involves significantly more trade-offs than a successful business resolution, it should ideally accommodate all parties. The employee has six months to locate a better-paying job, and the company has six months to find a replacement in this situation.
Get The Right Professionals
If the agreement is large or sophisticated, you’ll want actual experts on your side to help you negotiate and create the contract. If you’re selling your business, for example, hiring an investment banker who understands your industry and has ties with potential purchasers is usually a good investment. If you’re working on a real estate transaction, you’ll want an experienced real estate attorney who has handled numerous transactions similar to the one you’re working on (and not a general practitioner lawyer). If you’re doing a merger or acquisition, you’ll want a lawyer who has completed many mergers and acquisitions (and not a general business lawyer). These consultants aren’t cheap, but they’re well worth the money if you find the right one.
Never Accept the First Offer on the Table
Accepting the initial offer from the opposite side is often a mistake. If you’re selling your company and get an offer, for example, consider countering with a higher price or better terms (even if there are no other offers). If you do not counter, the other party will be apprehensive that they have offered too much and will have what is termed “buyer’s remorse” and try to back out of the purchase.
Purchasers anticipate a counteroffer because they anticipate that their initial offer will be rejected. Depending on the situation, most buyers will allow room in their first offer to increase the price by at least 5% -15%. Counteroffers and some back-and-forth negotiating will almost certainly result in the negotiating parties feeling pleased that they obtained the greatest bargain possible and so being more committed to sealing the purchase.
Final Thoughts
Effective business negotiations require effective communication skills, and the ability to always stay in the game. By applying these and other skills you will be able to get more than you thought for your company. Remember, that you are dealing with human beings, who have all the basic needs of human beings.
