From the time you make your first hire or walk into a banking hall to ask for some capital, negotiations are everywhere. Sometimes you are looking to purchase, and sometimes you are looking to sell.
Sometimes you are pitching your company, and sometimes you are on the other table being pitched to. Regardless of what side of the table you are on, there are skills you need to get the best deal for yourself. And there are some mistakes that you can make that will leave you losing out every time.
You want to wing it
No. You don’t really want to wing it. Never walk into a negotiating room without having done thorough research on the other side. If you are bidding for a contract, for instance, find out beforehand if the other side have handed out similar contracts before, and what value they went for. Also seek to understand their motivations, needs, strengths and weaknesses. This oppo-research may entail professionals such as accountants and attorney who will provide you with grounded advice.
Take some time to analyse your side’s desired outcomes before the negotiations start. What are the minimum terms that you can accept? What are your alternatives if you do not clinch the deal? What options are you going to lay out before them?
You want to cut to the chase
A little foreplay is nice, do not be so quick to dive straight into business. Whenever possible, take some time before negotiations begin and engage in small talk with your counterpart. Research has shown that small talk in negotiations helps both sides get a better deal at the end. A 2015 study by America’s Kogod School of Business found that small talk builds social capital and increases the perception of cooperativeness and likeability of a negotiator.
Even when the negotiation is taking place over email or phone messages, it pays to call the other party beforehand and introduce yourself.
You haven’t mastered a poker face
The ability to not wear your emotions on your face is integral for a negotiator. Negotiations can sometimes take a frustrating turn, but you should strive to remain calm and composed all through. Similarly, if they suggest a figure that exceeds your expectations, resist the urge to jump up in joy. Instead, remain calm and even press them for more.
Furthermore, wear thick skin and resist absorbing their problems. They will always present you with a jeremiad that’s supposed to explain why they cannot give you what you are asking for. Do not let their problems affect your resolve. If, for example, they cannot manage to do the job in three weeks because they are short-staffed, maybe there are other firms out there that could actually work around your deadlines.
You talk too much
Do not be the type of negotiator that never stops talking thus does not have the time to listen. And even when you are listening, resist the urge to think about what you are going to say next. Instead, listen carefully to their points, paraphrase their main points, and echo their own words to them. This active listening strategy will not only help them feel more comfortable around you but also help you acquire valuable information on your counterpart.
You are a selfish negotiator
Many times, discussions that focus on the primary negotiating point, such as the price points, might become contentious and go on for a long time. When this happens, try shifting the focus light from these main pain points to other benefits that you might be offering alongside. Look for other issues that the other side might care about more than you can provide with relative ease. If your main issue is the deal-breaker, these add-ons might just be the dealmakers that you need.
For instance, if they say your prices are too high, explain to them that you also offer free delivery, or that your products come bundled with twenty years’ worth of free after-sales service.
Negotiate towards a win-win outcome. Is there a way that both sides can walk from the table being better off? Can you ensure that at the end of negotiations, both sides will feel like they have gained something positive from the process?
It may not always be possible to come out with a win-win outcome, but it should usually be your ultimate goal.
You are willing to walk away
In your entrepreneurial journey, you will not win every negotiation that you engage in. Thus, do not burn your fingers in a deal that is clearly not worth it for you. If you do this, you are likely to end up with regrets or worse. Your company could make losses just because you insisted on holding on to a bad deal.