Negotiation plays an integral part in any business. Whether you are a solo entrepreneur or the CEO of a large corporate firm, you will face the negotiation phase at some stage. Understanding the negotiation process is important to avoid negative situations. The goal of negotiation is not “winning” but rather to attain a mutually agreed upon ground. Negotiation involves at least two parties and in a business structure it involves communication between owners, suppliers or customers.
It’s important to have strong communication between both parties, to ensure that terms are being defined and will be met after the agreement has been concluded. The following include tips and hints for a successful negotiation process:
Define the goals
It is crucial for business owners to specify their long- and short-term goals during the negotiation process, which allows for tracking success and results. For instance, questions such as total quantity ordered, delivery date of materials and pricing should be addressed in the process.
Define the scope of the agreement
Business owners must define what will be accepted and what will not be accepted as a part of the negotiation. This will allow both parties to understand what to expect from each other while maintaining transparency.
Gather information about the negotiating party
Gathering information about the party involved will put business owners at a competitive advantage. Understanding strengths and weaknesses will allow business owners to deal with the involved party’s requirement in a strategic manner.
Be a good listener
The best negotiators are excellent listeners. Paying attention to the minute details in the conversation during the negotiation process may result in attaining information that proves useful to the business. It is important to engage the concerned party in negotiation to better understand the key elements of the agreement. Be sure to address issues or challenges that may arise, in addition to addressing logistics and pricing.
Avoid mentioning “price” first
Allowing the concerned party to quote their price first may yield extra time to evaluate the feasibility of the negotiation and may prove to be useful in relation to price bargaining in the agreement. However, this could also allow the other person to set their own pricing, which could be much higher than what you originally had in mind.
Concurrently, you may face a situation where you experience negative tactics used by the person you’re negotiating with. Business owners should be alert if a negotiating party uses tactics such as low-balling, stalling the conversation, offering no solutions or answers, or if the person you’re speaking with has limited authority or is not able to make a final decision.
As entrepreneurs or leaders in the community, what are your thoughts on negotiation tactics? What are the factors that business owners need to consider before entering into negotiation? Please feel free to share your thoughts.
To read more about various types of negotiation tactics, please visit:
Thanks for reading, and until next time… stay WISE!