Negotiation is one of the fundamental parts of staring your own business. Everything from acquiring a business loan to clinching deals with new clients and settling prices with suppliers will take an element of bargaining and compromise.
For some, this type of haggling comes as second nature; but for others, the mere thought of business negotiation makes them break out in a cold sweat. Fortunately, it’s a skill that can be learned with a bit of practice, preparation and adaptability.
Read on for five easy-to-adopt pointers on how to achieve success in a negotiation, in order to get your startup swiftly off the ground.
Do your homework
If you’ve learned anything thus far in your entrepreneurial journey, it’s probably that there is no such thing as being too prepared. When meeting a new client for the first time, make sure you have sufficient knowledge of them and their business. Research exactly what their business does, what their role and responsibilities are, what you can do for them. If possible, research information on existing or past relationships they have with other businesses like yours, as well.
Perhaps you’re planning a deal with a supplier, instead. If so, be sure to arm yourself with competitor rates and discounts. Shopping around to get quotes from a number of places will give you bargaining power when it comes time for the sale. Don’t accept the first price you’re quoted, as it’s probable that you can negotiate a better rate.
Similarly, when applying for a business loan, be ready to talk through your business plan and financial record. The banker will want to know exactly where the money is going and needs to feel confident that you’ll be in the position to pay it back.
Related: 10 Techniques for Better Negotiation
Respond to behavior
Good negotiation technique is very much about tailoring your behavior to the circumstances. For example, an individual who is generally easy-going and friendly in their day-to-day manner could decide to play hard-ball while negotiating. This means that it can be hard to predict how an individual will approach your discussion, so you need to be prepared to adapt to all possibilities.
If you’re haggling prices with a supplier and they’re being cooperative, there’s no reason not to be cooperative in return. On the other hand, if you’re in a client meeting and the client is acting in an overly dominant or aggressive manner, nothing will be gained from mimicking this behavior. Instead, keep a cool head. If they react negatively, the best thing to do is reschedule the meeting for another time. As a new business, you don’t want to burn any bridges with potential clients (or accept poor deals), so it’s best to come to important decisions when both parties are being compliant.
Allow a bit of give and take
The most effective negotiators are calm, pleasant and helpful, as likability usually leads to influence. Plus, negotiations are a two-way street, and the best possible outcome is one that is mutually beneficial for both parties.
Are you in the process of signing a new contract with a client, or making a prospective new hire an offer of employment? Try to gauge what the other side is hoping to get and decide in advance where you would be happy to make concessions in order to meet in the middle.
Work on building a good rapport with whoever is on the other side of the table by demonstrating that you’re attentively listening to them and taking their thoughts into consideration. When a mutual respect has been gained, you’ll both feel more inclined to strike a compromise. As a bonus, you may even build a long-term professional relationship that can prove invaluable in the future.
Be prepared to walk away
Unfortunately, not every negotiation is going to end with the outcome that you want. Enter the discussion with a clear idea of what you’d like to get out of the arrangement and what the minimum is that you’d accept.
Never say yes to the first offer. If you don’t make a counter offer, the other party may feel that they have been too generous and attempt to renegotiate a tougher deal. Likewise, if it doesn’t look like you’re going to achieve a desirable result further into the meeting, don’t just settle for the sake of it. Walking away is far more sensible in the long run than agreeing to terms that you’re unhappy with.
Calling their bluff is always an option, too. Sometimes the mere threat of calling it a day can make the other side more compliant, as they might not want to lose the opportunity you are offering.
Promptly get the deal in writing
Once you’ve come to a verbal consensus, put the agreement in writing as soon as possible – whether this be a client contract, supplier agreement or offer of employment. It’s common for deals to die or become derailed due to delays or a lack of momentum. If you take too long to get it in writing, the other side may try to renegotiate terms.
At the very least, outline the terms in an email within 24 hours of the deal, so there’s a paper trail and evidence of the agreement. This will serve as a temporary agreement while the formal document is being written up and signed.
If you bear these five points in mind ahead of your next negotiation, you’re sure to feel more prepared, more confident and in a much better position to leave with a successful outcome.
Originally published Feb. 20, 2019.