The 5 basic points of negotiations that every entrepreneur needs to know to be able to manage them well…
If you’re a freelancer or you run a small business, you will already have happened to make an offer to a customer and having to negotiate and then accepting an agreement with a hint of regret, because in one way or another “would you rather get a little more”.
This little more can be translated into different aspects: from the purely economic (the price of your service or your product) to those relating to working mode (timing, travel, reimbursement of expenses …). Sometimes this is something that you have taken for granted but that the customer does not even remotely considered, and which have not even been debated in the terms of your agreement.
In some cultures the negotiation is an integral part of any business transaction, while often it is not even contemplated: many people do not involuntary negotiations for fear of seeming rude, aggressive or pretentious, only to accept the final offer as it is, at the risk of never being fully satisfied with what they got.
Your needs and those of your customers are often different, and that’s why knowing how to negotiate at the right time and in the right way can be crucial to establish a bilateral relationship can satisfy both, and therefore more likely to develop a mutual confidence and a more solid continuity, the so-called win-win agreement (where both “winning” party).
Learn to negotiate you can. Let us now 5 focal points and common to all the trading techniques that you have to be able to master.
#1- Focus on common interests, and not only on your goals
In a negotiation, usually, each side tries to pull water to their mill according to its own objectives and the importance of the position it holds. Think of a small press office agency looking for a partnership with a major online publishing group.
The big group, in principle, does not need the small agency, since its coverage is already sufficiently wide. But what went wrong? Does not, for example, quality content and really interesting material for all the audience that is able to reach. The small press office, specializing in a particular sector, may be the key to be able to deliver content specific, aimed at well-defined targets, and quality.
Concentrating and focusing its offer on the parties common interests, the small agency has the opportunity to reach their goal.
Similarly, before engaging in negotiations with a customer or a supplier, you will need to evaluate and highlight the mutual benefits that your business relationship will give both, beyond the purely economic objectives that everyone had set.
#2- Be prepared for various scenarios and anticipate an exit strategy
Once an agreement is signed, it is difficult to go back. You must therefore carefully consider every aspect, even those not directly mentioned in the negotiation points, but who are actually an integral part.
You’re giving to a supply of the material to a new customer, and you have determined the price. But you have defined who will compete, for example, the shipping charges of the goods? And in what manner and what timing should be made shipments? During the summer or the Christmas holidays will have to be guaranteed the full operation? Each of these aspects corresponds to an “if” that necessarily has to pay a “then” .
You must be able to foresee all the consequences of the agreement you are about to sign accordingly. E.g.:
- IF you expect a certain price, THEN you guarantee me that you’ll assignments of shipments;
- SEE shipments are not punctual, THEN assure me a refund or a discount on the next delivery.
This way you do is set priorities of an agreement, and calibrate the deal on them. The negotiation will be less rigid, more flexible, and so will include the elements quid pro quo that will lead to a win-win agreement in which a small renunciation is compensated on the other side and vice versa.
However, it is said that one can always find an agreement. Always keep ready a plan B, what in the jargon is part of the BATNA (Best Alternative To a Negotiated Agreement – the best alternative to the agreement). Sometimes you have to you can afford to close the deal with a stalemate, but to do so you must have your back covered. You do not want to sell below the price you set, and the current negotiations were bogged down? If you already have on your hands another customer, stop trading and offer it to him.
You may also like to read another article on heygom: Liquidity and cash flow: 3 Rules for the young entrepreneur
#3- The creativity in the trading strategy pays off
The terms of trading are basically a series of things that one side wants to get across. Do not limit yourself to a simple bullet point, but enrich each request highlighting the motivation, the short- and long-term benefits, expanding the horizon beyond the here and now.
Hypothesis: after years of continuous work with a client, the renewal of the contract ask for a rise in the price of your usual supplier.
Go further: he explains that the increase is due to an upgrade of your tools, expansion of your business, recruitment of new staff, and that all this will serve to guarantee a better service, or, even better, to increase range of services offered by your company.
In this light, you can also offer special incentives or bonus to your customer, so encouraging them to accept the adaptation of your rates by virtue of more and better services that you can provide them with.
#4- Focus on what the other party wants most
We have already seen that it is important to highlight common interests and align with the party’s needs. Also tries to understand in advance, what are its values, the things you want beyond the simple economic agreement. This way you can predict any objections, such as ethical or related to the mission and to the image that the other party must safeguard.
Think of the case of a company business consulting who wants to quote a client in its portfolio. The motivation is obviously to show a brand of some significance, to give prestige to its customer portfolio. Something seemingly so simple but is likely to have unpredictable consequences, to the point of risk to do a real injustice to the customer, who might not like at all and does not authorize the use of its name and its logo.
The customer, for example, may be afraid to disclose publicly a strategic decision or a major supplier, or perhaps not wanting to appear aside others less prestigious brands, or with which there may be a conflict of interest or image.
In this case, it will be important to provide for the various scenarios, preparing yourself to reassure the customer for possible objections, and try to bring the operation by touching the right chord.
For example, the main theme could be just the “control” of the part of the client’s brand. Therefore, a proposal for the quote between customers on their site could start showing just how the brand, what brand would be added would be approached, how description and relevance. But, even more important, it will be the form of the request. A good strategy would be to write up the request by relying on the concept of “concession” from the customer the opportunity to use its brand name and in a safe environment and value for the customer.
#5- If you work in a team, be sure that all your employees are prepared and aligned
If the meeting with the other party will also attend some of your partner, co-worker or employee, make sure you have received all the information possible, that it is 100% aligned with your goals, and with the stance you want them.
Define its role during the negotiations; if and when it agrees will have to intervene, you do so that your interlocutor has immediately present because you wanted it to be present at the meeting.
If you decide to make you take someone to a negotiation, it is to have an effective support, to strengthen your position, to put the other party in a position to clarify any doubt of being able to ask questions of a certain type and to have adequate answers.