4 crucial steps to successful negotiations
Read time: 3 minutes
Negotiating is an essential part of an entrepreneur’s life because almost everything in business is up for negotiation.
That’s why it’s so important for you to hone your deal-making skills, says BDC Senior Business Advisor, Rony Israel.
“Whether you are discussing the acquisition of a competitor, a better price with a supplier or a salary package with a job candidate—you are negotiating over and over again,” says Israel, who was a long-time entrepreneur before he began advising business owners.
The good news is that negotiating is an art that can be mastered. No matter the topic, Israel advises entrepreneurs to follow these steps to reach the best possible agreement.
Establish your goals.
- Before entering into negotiations, determine what your goals are and how reaching them will benefit your business.
- Prepare. Consider the interests and objectives of your negotiating partners. Put yourself in their shoes. This homework will prove invaluable during the discussions.
- Look at different scenarios that may arise during the negotiations and how you will respond to each.
- Know your deal breaker. Decide from the start what the most desirable outcome would be and what an acceptable one would be. Where will you draw the line and walk away?
2. Opening discussions.
Go for Win-Win
- Explain your interests and point of view and listen carefully to the other side’s position. Seek to understand their key issues—what’s crucial for them may not be important to you.
- Always ask for more than you’re willing to settle for, but don’t get backed into a corner early in the process. Start by resolving the easiest points first.
- Build common ground and trust. Use positive, inclusive terms such as: Our areas of agreement, beneficial to both sides, our shared vision.
- While some preliminary groundwork can be done over the phone or by email, try to discuss important matters face to face. “Observing reactions to your proposals gives you a significant advantage,” Israel says.
- Make sure you’re negotiating with the decision maker. After a lengthy and hard-fought negotiation, the last thing you want to hear is: “I’ll have to check with my boss and get back to you.”
Have them planned beforehand.
- “Everybody needs to put water in their wine,” Israel says. “The question is how much?” Look for trade-offs. When agreeing to a concession, ask for something in return.
- Stick to the facts and don’t get emotional. You’ll risk losing your objectivity and missing opportunities.
- If it seems you’ve reached a dead end, look for something to offer that’s less important to you, but relevant to the other party. Still stuck? Ask: “What do you suggest we do?”
Never commit until the end.
- Summarize the most important points of the agreement.
- Confirm. Is that a yes? Do we have a deal?
Finally, remember that when negotiating you are also looking to build a future relationship. “Most people think negotiating is about confrontation,” Israel says. “This couldn’t be further from the truth. Always negotiate in good faith and look at the other side as a potential partner and source of repeat business.”