One of the only non-negotiable parts of running a business today is negotiation. You’ve got do it. Every day.
You negotiate when you hire staff. You negotiate when you buy or lease real estate. You negotiate when you buy supplies. And you negotiate when you sell your products or services.
You simply can’t walk into any deal and expect the other party to accept your terms outright—or vice versa—and achieve long term success.
If you find yourself avoiding negotiations or if you feel you’re on the short end of too many deals, it’s time to improve your negotiation skills. Here are some keys to negotiating that we’ve learned over the years.
Be willing to walk away—
You owe it to your company to refuse to make a bad deal. Whenever you’re negotiating, you must have a mindset going in that there is a point where, if the other party offers too little or demands too much, you’ll end the discussion. Never go into a negotiation so desperate that you’re afraid to not make the deal.
By the way, always have a Plan B. It bolsters your confidence to have a fallback, even if it isn’t ideal. For example, if the Toyota dealer doesn’t offer what you feel is a fair deal, there’s always a Nissan dealer down the street.
Be the reluctant one—
In almost every negotiation, one of the parties will be anxious to make the deal. The other party—you—will be less than enthusiastic. The weird thing is, even if you really, really want to make the deal, you need to own the reluctant role . . . because that psychologically pushes the other party into the eager role. And most of the time, the eager party is the one that compromises his or her demands.
How do you sell yourself as reluctant?
Body language. When you’re eager, you sit up straight, feet on the floor, nod enthusiastically, and your body is tense. When you’re more lukewarm, you sit back in your chair, relax, and take on a “convince me” demeanor. Think about the word unflappable.
Verbal language. Avoid getting excited and animated by agreeing positively. Instead, respond calmly with phrases like, “Interesting. How do you think that would work?” “Yeah, I can maybe see that?” “Hmmm. Is there data to back that up?”
Determine what do you want to get out of the negotiation—
And what you’re willing to give up.
By going into the negotiation knowing your parameters, you’ll have greater confidence throughout the negotiation. Decide what a deal that you can live with will look like. Be realistic; you’re not going to get something for nothing. Balance what you’re getting with what you’re giving up.
You need to know beforehand what the deal breakers are . . . and don’t be afraid to use the phrase, “That’s a deal breaker for me.”
Know what’s in it for them—
Briefly, if you focus the negotiation on what you need, you’ll get a worse deal than when you focus on what the other party needs. That means in a hiring situation, you may need a bookkeeper, but you should focus on what the candidate needs . . . money, job security, advancement opportunities, challenging work, etc.
Or, if you run a professional basketball team, you may need a shooting guard, but the other team needs a power forward; concentrate on what the other team is getting with the power forward.
By building up what you’re offering—you need my X more than I need your Y—you make it harder for the other party to maintain that he/she isn’t getting terrific value.