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As a business owner, do you negotiate to win? You may think it’s a simple aim, but doing so successfully can be more complex than you might think.
During a banking career of 25-plus years, I have had the opportunity to negotiate all kinds of deals and issues. One of the best lessons I learned was how to negotiate to win for everyone involved. The biggest influence on me was a book by James Thomas titled “Negotiate to Win.” James was an instructor during my training at the Pacific Coast Banking School. In class we applied principles from his book while simulating two nuclear-armed countries trying to reach a mutual disarmament agreement. Talk about complexity and high stakes! That experience helped me appreciate how multi-layered a successful negotiation really is.
While the idea of “winning” is paramount, so is the idea of not losing. Since there are at least two sides involved, ultimately you may be better served by thinking of “win-win” than simply “win.”Keep the relationship in focus
Your negotiations will often take place with a party whose relationship you value, such as a customer, vendor, employee, or investor. Your interaction can help build a foundation for a long-lasting bond, or it can alienate the other party. Thus it’s a good idea to set an expectation that each side will work to achieve a mutually beneficial outcome.
This dual goal of maintaining a good relationship and creating a mutually beneficial deal can help guide your preparation for and behavior during the negotiation. It requires forethought so you can anticipate the other party’s objectives and accomplish yours. Think about what the other party likely wants to achieve and may or may not give in on. It may also prevent you from “beating up” or otherwise taking advantage of the other party, which can lead to ill will and may backfire on you later.Some guiding principles
Here are some basics to consider as you prepare for your negotiation.Know the value of your products and services. This is critical. Knowing your value serves as a foundation; it will help you determine your bottom line and establish pricing discipline around such parameters as necessary margins, break-even points, and profit goals. If you have employees with the power to negotiate for you, make sure you all have the same understanding of your firm’s value and that of its products or services. Don’t be afraid to walk away. If you know your value and bottom line, you should have no trouble walking away if the other party’s terms grossly undervalue what you bring to the table. This demonstrates your belief in your company’s value and may actually spur the other side to reconsider and reframe their offer. Of course, be respectful and don’t take this personally. Walking away does not equal losing. Feeling like you’ve been taken advantage of is a far worse outcome, and you can’t be all things to all people. Be nimble and creative. What concessions are you willing to trade? You may encounter unexpected aspects to the other party’s offer that may work in your favor or lead you to a beneficial counteroffer. You may find flexibility on unit price, for example, in exchange for guaranteed repeat purchases at a certain volume. Take your time and allow yourself to reflect, if necessary. Work through all the details, and don’t allow any discomfort with the process to force you to settle.
Finally, while negotiating is often a process with many moving parts, don’t dwell on a single aspect of the negotiation so much that you lose sight of the whole package — which includes the relationship with the other party or parties. If you can achieve your goals and make room for the other parties to walk away feeling like they got a good deal, that’s the ultimate win-win. It’s not easy to do, but it may pave the way for many beneficial deals ahead.
Do you have additional thoughts or tips on successful negotiating? I’d love to hear about them in the Comments section.Read More ›