It’s no secret that small businesses and startups have had a tough time of late finding financing to fund their idea or help them expand their enterprise. Higher interest rates and a general drying up of capital have also made financing that is available very costly, especially compared with pre-pandemic times.
That makes the importance of negotiating a fair deal so much greater when a business is able to secure financing.
Trouble is, startup entrepreneurs are not always the best negotiators. Sure, for some small business owners, negotiation comes naturally. Think of the ones who started negotiating an allowance and extra TV time with their parents at age four.
For most of us, however, developing negotiating skills comes from effort and experience, not formal education. Fortunately, as Denise Louise Jeffrey writes, “negotiating is a skill that can be learned with a bit of practice, preparation and adaptability.”
Starting a business requires, quite literally, hundreds of negotiations. Some are small, like securing the best price on printing your letterhead and business cards. Others are far bigger deals that can make or break your startup business from the get-go. Sometimes you are the buyer; other times, the seller. Either way, the skills you need to be a good negotiator are the same.
Here are 10 negotiation techniques that can make you a better, more confident negotiator on behalf of your startup:
- Prepare, prepare, prepare. Enter a negotiation without proper preparation and you’ve already lost. Start with yourself. Make sure you are clear on what you really want out of the arrangement. Research the other side to better understand their needs, as well as their strengths and weaknesses. Enlist help from experts, such as an accountant, attorney or tech guru.
- Pay attention to timing. Timing is important in any negotiation. Sure, you must know what to ask for, but also be sensitive to when you ask for it. There are times to press ahead, and times to wait. When you are looking your best is the time to press for what you want. But beware of pushing too hard and poisoning any long-term relationship.
- Leave behind your ego. The best negotiators either don’t care or don’t show they care about who gets credit for a successful deal. Their talent is in making the other side feel like the final agreement was all their idea.
- Ramp up your listening skills. The best negotiators are often quiet listeners who patiently let others have the floor while they make their case. They never interrupt. Encourage the other side to talk first. That helps set up one of negotiation’s oldest maxims: whoever mentions numbers first, loses. While that’s not always true, it’s generally better to sit tight and let the other side go first. Even if they don’t mention numbers, it gives you a chance to ask what they are thinking.
- If you don’t ask, you don’t get. Another tenet of negotiating is, “Go high, or go home.” As part of your preparation, define your highest justifiable price. As long as you can argue convincingly, don’t be afraid to aim high. But no ultimatums, please. Take-it-or-leave-it offers are usually out of place.
- Anticipate compromise. You should expect to make concessions and plan what they might be. Of course, the other side is thinking the same, so never take their first offer. Even if it’s better than you’d hoped for, practice your best look of disappointment and politely decline. You never know what else you can get.
- Offer and expect commitment. The glue that keeps deals from unraveling is an unshakable commitment to deliver. You should offer this comfort level to others. Likewise, avoid deals where the other side does not demonstrate commitment.
- Don’t absorb their problems. In most negotiations, you will hear all of the other side’s problems and reasons they can’t give you what you want. They want their problems to become yours, but don’t let them. Instead, deal with each as they come up and try to solve them. If their “budget” is too low, for example, maybe there are other places that money could come from.
- Stick to your principles. As an individual and a business owner, you likely have a set of guiding principles and values that you just won’t compromise. If you find negotiations crossing those boundaries, it might be a deal you can live without.
- Close with confirmation. At the close of any meeting (even if no final deal is struck) recap the points covered and any areas of agreement. Make sure everyone confirms. Follow-up with appropriate letters or emails. Do not leave behind loose ends.
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Our bottom line on negotiation techniques
When it comes to entrepreneurial talents that spell success in the world of startups, the ability to negotiate well is one of the most vital attributes you can possess. Take care to develop your negotiation strategies. Some people think they are good negotiators, but in reality are not. From bringing in good people, to arranging financing or nailing that first big deal, sound negotiating techniques will be essential.
Originally published June 13, 2021.
