Basics of Negotiation for Beginners
People learn and practice the art of negotiation from the time they are young children. For a small business, negotiation can make or break your company. Making the best deal possible is especially critical in tough economic times.
Know who you are negotiating with. This requires some background research on your part. Talk to other business associates who have worked with the person or company before. They can provide valuable insight. Understand the product or service you plan to negotiate.
Your first offer will usually set the tone for the rest of the negotiations. While you want to make an aggressive initial offer, dont be insulting. The final goal is to arrive at some type of agreement. See if you can bring something to the table that is not necessarily monetary, such as delivery, availability, service or another intangible. You can ask for these things as well. Some negotiations will only be concerned with the bottom line, so offering intangibles may not work in every situation. Be very cautious when discussing budget limitations.
Focus on your strengths. If you are the only source with your product, you have great leverage. Consider the economic conditions and supply and demand. Use your bargaining power effectively. Steer the negotiations in the direction you hope the process goes.
Make an offer that includes all the specifics. This addresses not only financial compensation but how much work is involved, clarification regarding type of product, any incentives, warranties and service and paperwork. You can also trade a lower price for less service and use any points listed as bargaining chips. Negotiate any terms you have difficulty working with. Get everything in writing with all pertinent elements. Learn from what you have already accomplished. Make notes so you can track why you made each offer.
Assess the most important thing to both parties. You might care about price or delivery date; the other business might be concerned about product quality or follow-up service. Look at his priorities so you can give the other party what he needs without compromising your own position.
Plan to finalize the deal and be prepared to compromise toward the end. Then sit back and congratulate yourself on a job well done.
“By following these several tips, your small business can effectively apply negotiating skills in many situations to tighten your bottom line” added Salomón Juan Marcos Villarreal, president of Grupo Denim.