The 14 Best Business Negotiation Tactics
1- Understand the Other Party’s Perspective
Bad business negotiators do all of the talking, attempting to control the conversation at every opportunity they get and endlessly expound on subjects that do not even need to be discussed. The best negotiators take the time to listen—and they don’t do so to be polite—they listen to truly understand what the other party has to say. While listening, determine what it is the other party desires, what limitations they have, and how flexible they seem to be with meeting your demands. The quickest way to attain this understanding is to simply shut up and listen.
2- Always Be Prepared
Before the negotiation meeting takes place, go to the business’ website and learn all you can about them. In fact, go above and beyond and do a Google search of that business. Review any relevant articles, press releases, social media posts, etc. Also be sure to review any similar deals to the one being proposed. For example, see if the company has made any prior agreements that were filed with the SEC. Next, now that you have a better understanding of the company or organization, do a Google search of the name of the person you’ll be negotiating with. Review the person’s background and see if they have a LinkedIn profile or other website that highlights their current and previous dealings. Lastly, be sure you have a clear understanding of the proposal and desired pricing that will be negotiated.
3- Understand the Proposal
Having a comprehensive understanding of a proposal is crucial in any negotiation. Consider the following factors:
-Who has more leverage?
-Which party is more desperate to get the deal done?
-What time constraints are the other party facing?
-Does the other party have other options to do business elsewhere?
-Which party benefits more from the deal? Or is it equal?
4- Be Kind
Sure, it’s simple. But you would be surprised by how many negotiations never materialize due to one party simply not liking the other. Absolutely no one desires to do business with a mean-spirited individual or someone who’s a pain in the rear end to work with. Never assume that the negotiation will reach a conclusion quickly. You may have to deal with the other party for months to come—or better yet—you might work (or maintain a relationship) with the party in the future, once negotiations are complete. Always assume your business relationships will be long-term; and, just like romantic relationships, you have to be kind or things will go south fast. You don’t have to be fake. Just be polite and respectful.
5- Write the First Version of an Agreement
One vital principle of any business negotiation is that you must prepare the first draft of a contract. This keeps you and your organization in control and allows you to word the document how it best suits your interests. Be sure to include key aspects that haven’t been discussed. It’s just too risky for you to put the future at stake by having the opposite party write the draft. Laziness is part of the human psyche—use it to your advantage by taking initiative and doing your own writing while the opposite party lazily sits around. Often, the opposite party will succumb to their laziness without hesitation and allow you to do plenty of work that they don’t have to; however, don’t make the draft so one-sided in your favor that negotiations will have to take place again. You’ll be right back at square one—and sitting across from some very angry people.
6- Be Prepared to Walk Away
Just like when you’re playing poker, you’re sometimes going to be dealt such awful hands that you have no choice but to fold. And it’s much better to fold than to go all-in when there’s a lot to lose. Instead of a bad hand, in the game of business, you’ll sometimes be dealt a deal proposal that’s so one-sided in favor of the opposite party that it’s laughable. Don’t get angry or frustrated. If common ground cannot be found, Just walk away. Of course, walking away is always easier when said than done—but you must listen to your intuition when you are faced with a proposal that could potentially jeopardize your company. Before the negotiations even begin, know with one hundred percent certainty what both your target price and walk-out price is. This certainty will save you a lot of time when the offer is bad. Always arm yourself with plenty of market data at any negotiation to convince the other party why your number is reasonable—or why theirs is not. If all else fails, just walk away.
7) Restrain Yourself from Conceding
Meeting in the middle is a simple concept, but as you should know, business negotiations are rarely simple and are often filled with proposed concessions that seemingly benefit the other party more than your own. You don’t have to blindly dismiss every proposed concession but you do need to be thoughtful about when to concede—and when you do, you must get something in return. Otherwise, there’s no point in even being present at the negotiation table if you’re just going to give in to all of the demands that the other party presents. Be prepared with reasonable counters to proposals so that concessions are always limited.
8) Remember, Time is Never on Your Side
Always keep in mind that the longer it takes for a deal to be finalized, the greater the odds become that something will happen that kills or impedes the deal; thus, work (as you always should) with haste and make sure those around you do too. Phone calls should be returned immediately. Emails should be responded to immediately. “Time is money,” may be a cliche, but in this case, it’s definitely true. But be careful not to rush too fast. You don’t want to risk agreeing to concessions that harm your company. Remember, time is never on your side. Especially during a business negotiation.
9) Be Aware of Deal Alternatives
If you’re interested in buying a car, are you going to fixate on the first car you look at it and do all it takes to acquire that car? Of course not. You’re going to go out and look at many cars to find the one (and deal) that’s best for you. This is the same mentality you need to have in any business negotiation. You always want to have alternatives so your company can get the best deal. Having alternatives can enhance your leverage and make it more likely for the opposite party to give you some crucial concessions. Don’t ever rub it in their faces, but letting the opposite side of the table know that you have options is a key component to securing a great deal. Negotiate simultaneously with multiples parties to get the best deal.
10) Don’t Let One Issue Bog You Down
You need to do whatever it takes to avoid letting one issue stall the negotiations. Remember, time is money. If there’s a disagreement over one item and it seems there won’t be a resolution any time soon—simply suggest that both parties set it aside for the time being and come back to it later on. Go ahead and move on with criteria that can be solved. You or the opposite party will most likely think of a solution after you have a day or two to let the issue rest.
11) Recognize Who’s the Decision Maker
Do your best to quickly infer whether the other person is a true decision maker or a waste of your time. One way to recognize this is to see just how many times the person across from you says “yes” or makes concessions to your proposals. If all you hear is “no,” end the negotiation by informing the person that you need to negotiate with someone who has the authorization to make concessions—or better yet—make decisions.
12) Always Reject the First Offer
No matter what the criteria may be, it’s almost always a mistake to accept the first offer that the opposite party proposes. Always be prepared to make a counter-offer that will benefit you or your company more than the first offer. If you don’t make a counteroffer, the other party may get cold feet and decide that they offered too much to you. Deals are never done until the contract is signed—so maintain leverage by immediate rejection even if it’s a dream offer. Most initial offers allow room for you to increase your benefits by about five to fifteen percent. Always take advantage of this as best you can. Don’t let a first offer poison your company—back-and-forth negotiation is the healthiest route to go.
13) Don’t be Scared to Ask Questions
Your future is at stake. You have every right to ask as many questions as you need. Be sure to ask basic, common-sense questions such as:
-Is this the best price I can receive?
-How can I be assured your product will work for me?
-What companies do you compete with?
-What makes your products better than those of rival companies?
-What else can you include in the deal that can benefit me?
-At what date do you feel this deal needs to be done?
-What is it about this deal that benefits you?
-How can I be certain that you will be reasonable?
14) Seek the Help of Others
Believe it or not, lawyers exist for more reasons than to just make life miserable for others. Seek out an attorney or advisor that can help you with the negotiation process. Have someone review contracts for you or, better yet, write them for you. If you suspect any bad business practices by the other party, ask for someone’s opinion. Negotiations are tough. So use all the help you have.