Experts at entrepreneur.com describe negotiation
as a delicate balance of give and take. Learning to strike this balance is
necessary for any entrepreneur hoping to build a prosperous business. It takes
time and practice and a whole lot of patience to hone a winning strategy. And
yet each deal is unique and needs to be approached correctly, which is why a
one-size-fits-all approach will never work for long.
It is therefore
important to know and exhibit some of the skills that will make you more
successful as an entrepreneur in any venture of your choice. Entrepreneurs should know that
successful negotiations are built on solid prep work.
This means that you may know something about
the parties involved and have done a little background check to know about
their business and maybe you have even talked to others they had worked with in
the past.
This is mainly to
get an idea of their strengths and weaknesses. The same is true if you are on
the other side of the table and are looking to invest in a product or service.
You should have a solid understanding of the pros and cons of the commodity
they are selling or the service being provided. The bottom line is, you need to have a
good idea of who you are dealing with and what they can offer.
Entrepreneurs must
should always go into whatever form of negotiation with their best foot
forward. You should be well rested. You should have eaten something, as being
hungry may trigger anger unknowingly. You should show up on time so as not to
walk in feeling rushed. If you have done the above, you should
be feeling positive, knowing that you are going in clear-headed and confident.
You will have the stamina and energy to get this deal done.
While you are in and set for the negotiation,
consider all the details of the opening offer. This is because the opening
offer usually acts as an anchor for negotiations. It is also where the details
get hammered out, so it is important that this is done carefully and
thoughtfully.
Experts point out that the basic elements of
an offer include the offer price, the work being proposed, what goods or
services are included, when it will all be delivered and if there are any
performance incentives, warranties or terms and conditions.
Obviously, price
is a key component to any deal, but keep in mind the other details. They can
matter nearly as much in the long run. If you are the one initiating the
opening offer, this is your chance to set the stage for the negotiations ahead
and start with the upper hand. You will not get what you do not ask for, so be
bold! If you are on the other side of the table, the offer is key to seeing how
close together you are. So know your bottom line, by deciding on what you are
willing to accept. And remember to take a close look at the details. What else
are you getting for your money and what else are you potentially signing up
for?
Put your ego and emotions under
control. It is important to note that while you should have confidence and
assurance because you have done your prep work, you also have to check your ego
at the door. Letting your emotions run the show will never serve you well. In
fact, you should be going in feeling as neutral as you can about the situation.
Leaving your ego behind will free you to think objectively during intense
bargaining. You can then negotiate from a standpoint of flexibility.
To be successful,
you have to be able to think clearly in stressful situations and be willing to
work to find common ground. If you walk in with a
middle-of-the-road attitude, you are more likely to strike a balance between
getting what you want and not giving away too much. On the other hand, you do
not want to give something away without getting something in return. Losing
your ego and putting your emotions aside will help you find right path forward.
For an entrepreneur entering into
high-stakes negotiations, it may be helpful to run through possible scenarios
with a friend or colleague. This will help you feel less nervous and it may
also show you objections to the offer that you did not think of, or help you
see a side of the deal that you did not consider.
Playing through
the scenarios, even if it is just in your own mind, may help you feel less
attached to the outcome. In order to treat the whole thing as a game, you
should care, but not too much. Having a little apathy will help you
stay neutral and keep your feelings in check. And remember, negotiations are
like anything else, the more you practice, the better you will be.
Understand your strengths and
weaknesses very well. Self-awareness is key when you begin negotiations. You
are essentially looking for the other side’s strengths and weaknesses. Not in a
cruel way, but to help you determine your next play. At the same time, you must
also be aware of your own strengths and weaknesses, so you do not allow
yourself to be exploited. Try to take an honest inventory of your strong points
and vulnerabilities. If your company is small, what is its growth potential?
Are you able to be more responsive to the market than a larger company? In
short, what can you offer that the other side cannot, and what can the other
side offer that you cannot compete with? Knowing where you stand on the
negotiation chessboard will help you determine how to land the best deal.
Another vital
skill that is needed when negotiating a deal is knowing when to walk away. When
you enter into a negotiation with the knowledge that you are willing to walk
away if things do not go as planned, you come from a position of strength. That
is why staying neutral is key to a successful negotiation. You cannot be
bullied into a deal if you just leave. But often we tell ourselves that this
deal means everything to us. Our ego is involved, and that weakens our
position. It is about mindset. You have to
believe that if this deal falls through, you are not losing an opportunity. You
are keeping that space open so when a better opportunity comes along you can
snag it. If you force a bad deal to happen, you are stuck. You are no longer
able to grab hold of something better. And there is no shortage of business out
there. So if you are pinning all your hopes on one deal, you may be killing
future business.
Try to negotiate in good faith. Whether
you are negotiating a long-term business deal or setting up a quick sale, it is
natural to feel on the defensive when you begin negotiations. We are all protective
of our interests and we want to cut the best deal in our favour. But if you are
hoping to walk away with your reputation intact, you need to practice
negotiating with compassion and good faith. Engage in active listening and
really hear what the other side is saying and asking for. What are the issues
that are making them hesitant? Then make sure that you relay your own
priorities. This is the basis of a ‘win-win’ solution, when both sides explore
each other’s positions and walk away feeling heard and comfortable with the
deal that was struck. Even if it appears that you are on opposite sides, there
is usually common ground to be had. Maybe the other side has a different goal
or an opposing position. But if you look for it, you can usually find mutual
gains both sides will accept.
Experts at
entrepreneur.com advise that you should know how to close. Negotiations may
feel like a game of chance, but they are more like a game of chess. A
successful negotiation requires a good sense of timing and the ability to sense
the other side’s next move. If you have done your prep work and are bargaining
in good faith, you should have a solid idea of what they are looking to get out
of the deal. And of course, you should have a clear idea of your own bottom
line. So you are either working to bring the
sides progressively closer, or the deal is going nowhere. Ask yourself what the
endgame is. Can the difference between both parties be split? If both sides are
close but a few numbers are hanging up the process, what will it take to shake
things loose? If you can strike a bargain that makes sense, it does not need to
be perfect.
It just needs to work for both parties
involved. If you can get to that point, you have set the stage for the final
handshake. If not, you have to be willing to walk away knowing it just was not
the right time. And mind you, there will always be another right time, just
have faith. (Punch)
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