10 ways
to improve your negotiating skills
Having to
negotiate a sale or purchase is a common requirement for the owners and
managers of small businesses. Excellent preparation and a logical approach can
help you get the deal you want. Here are our top ten tips.
1. Do your research
Clarify
your own objectives and make sure you understand what your opposite number
wants from the deal. For example, by doing some basic research into a potential
supplier, you can work out how valuable your custom is to them.
2. Decide what is negotiable
Before
you start to negotiate, draw up a list of factors that are most important to
you. Decide what you are (and aren't) prepared to compromise on. Key factors
might include price, payment terms, volume or delivery dates.
The key
is to establish your preferred outcome, but remain realistic, because if you’re
not prepared to compromise some negotiations won’t last long.
3. Plan your strategy
You need
to plan your strategy in writing before beginning negotiations. This will help
you set clear goals and work out where you will draw the line and walk away
from the deal.
Decide
the overall approach that you will adopt. Be clear about the type of deal you
want and the priority you will give it.
Write
down your negotiating strengths and how you might use them to get the
concessions you require. Consider ways of defending the weaker parts of your
argument and negating the supplier’s main strengths.
4. Select the best team
Once you've decided on your strategy it is essential that you get your negotiating
team right. Make sure it has skills in all the required areas and, where
necessary, use a specialist to negotiate in areas outside your expertise.
5. Choose the right time and place for negotiation
Ideally
select a time and place where you are not under pressure to close the deal.
6. Outline your requirements
Open
negotiations by outlining your requirements or terms and conditions and try to
get your opposite number to reveal their starting point for discussions.
7. Ask questions and listen closely to answers
Asking
questions will help you understand what your opposite number wants to achieve.
You may be able to get them to reveal how flexible they are on certain issues.
8. Don’t reveal your negotiating position or make
unnecessary concessions
If you
have to make concessions – look for reciprocation. Concessions should only be
made to help you get the things you value. You should also avoid appearing too
keen to do a deal.
Consider
what offer the other party in the negotiations is likely to make and how you’ll
respond.
9. Be aware of negotiating tactics
You need
to be aware of common negotiating tactics. If the other party keeps referring
to urgent deadlines or a person they need to confer with, they might be playing
games.
Don’t be
forced into making rushed decisions or unnecessary concessions, such as false
deadlines. Each time a point is agreed, clarify that you've understood it
correctly and write it down.
10. Draw up a contract
Once all
the points have been negotiated and a deal has been agreed, it’s best to get a
written contract drawn up and signed by both parties. While verbal contracts
are legally binding – they are difficult to prove in court.
Most
business owners would view a good deal as one that meets all their
requirements, but you should also consider other factors such as whether you
want to do business with a particular firm again. Although getting the best
possible deal in the short-term is important, a good relationship in the future
may help you get even cheaper prices or other perks, such as priority delivery.
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