Negotiating is an essential business-building tool that can help small business owners save money, improve efficiency, and boost profits. Whether you negotiate prices with vendors, fees with clients, or lease terms with landlords, the objective is to ensure that you get the most out of every transaction.
While asking for what you want may be all in a day’s work, even the most successful small business owners can be uncomfortable at the bargaining table. When it comes to generating the most desirable outcome for your business, the best defense is truly a good offense. These basic tips can help even the most inexperienced negotiator strike a better deal.
Worry Less About What People Think
Asking for better pricing, terms, or conditions often feels confrontational. Many business owners shy away from negotiating because they don’t want to appear rude or pushy and are often afraid of losing a customer or alienating a vendor as a result.
Don’t assume that people are going to think less of you for asking them to reconsider an offer. This is often easier said than done, but research has shown that we tend to overestimate the degree to which other people think we’re being assertive and underestimate their willingness to help. Effective negotiators worry less about what the other person is thinking and focus more on whether a particular sale or agreement is really right for their company.
Define Your End Game
Achieving the best outcome requires knowing exactly what you want to get out of a negotiation before you start. Without a clear plan and a bottom line, you won’t know whether the end result is in your favor or unacceptable. Prioritize your objectives beforehand and decide what you can afford to lose, where you have some flexibility, and where you will draw the line. This is the key to knowing when to walk away in order to avoid getting too little or giving away too much.
Do Your Research
When it comes to negotiating, it pays to be prepared. Being equipped with the right data and information will help you determine ahead of time where you need to focus your efforts in order to work out a favorable and fair deal.
Do your homework before going into any negotiation with a vendor or client. Know their background as well as that of their competitors. Have the latest information on the market price of the product or service you want to buy. If you have solid facts on your side, you will be much better positioned to pursue workable alternatives.
Work as a Team
Negotiation is often thought of as being an adversarial process that pits you against the other side. Instead, try approaching the transaction as a mutually beneficial process. Both parties usually want the deal to get done, so it’s often just a matter of figuring out how to make it a win-win situation for both sides.
Think creatively, work with a spirit of collaboration, and try to see things from the other person’s perspective. Explore innovative ways to sweeten the deal that will benefit your business. You might not get everything you want out of the negotiation, but keep in mind that the goal is to find a positive solution where you can both walk away satisfied.
Practice When the Stakes Are Low
People tend to think negotiating is a skill you either have or don’t have, instead of a skill that can be developed with practice. Find low stakes situations where you can practice your negotiating skills and build confidence. Ask your phone service provider to lower their rates or your office supply company for a volume discount. Getting a “no” won’t make or break your business, but asking will go a long way towards helping you get comfortable with the negotiation process.
Have a Backup Plan
Knowing what you will do if you cannot reach an agreement in your negotiation is the best way to ensure that you hold your bottom line. When setting your objectives, make sure you include several options that will help you reach your goals. If talks fall through with one client or vendor and you have an equally viable backup on your list, it will be much easier to shake hands and move on.
Don’t Take Rejection Personally
No one likes rejection. In fact, fear of hearing the word “no” is often the reason people don’t ask in the first place. However, no matter how good you get at asking, you will not always get a positive response.
It’s important to understand that rejection is rarely personal. It is often an indication that the other person needs more information or you need to make a stronger case for getting what you want. In other words, your offer was rejected, not you. The best way to master rejection is to get rejected and keep asking. Successful negotiators consider “no” the beginning of a negotiation rather than the end.
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