Negotiations are necessary to close a business deal, but facing a potential buyer, client, or competitor in the boardroom can be intimidating. The stakes are high, and the wrong negotiation tactic could make or break your deal. Before you begin to bargain for your next deal, here are some business negotiation strategies and techniques that will help you reach your goal:
Perform Due Diligence About the Other Business
Business negotiations cannot be left to chance. Being unprepared is a surefire way to end up with a deal that’s less than desirable. Before you walk into the boardroom, do your homework. Research the company so you know exactly with whom you’re about to negotiate. Here are some questions to answer ahead of time:
- What deals have they closed before? What are their business goals?
- Who will they send to negotiate? Is this person the CEO or president? Or are they a lower level employee who does not have clout to make the final decision?
- At what stage of negotiation are you?
- Against whom will you compete and how are they viewed by the company?
- What are your competitors’ strengths and weaknesses?
Formulate a Business Negotiation Plan
Once you know something about the other side, develop your strategy. As you strategize, keep in mind which side wants the deal more, who initiated negotiations, and who has more leverage. To avoid missteps or the risk of being blindsided, here’s what you should plan out:
- What you will and won’t accept. On what will you flatly refuse to budge? Travel requirements? An interest rate? On the other hand, what would you be willing to concede or compromise?
- Your BATNA. This is your best alternative to a negotiated agreement. Essentially, this is the lowest offer you’re willing to accept. For instance, you may want to negotiate a $500,000 deal, but are willing to accept a $480,000 deal?
- What your competitors offer. Who is your competition? What do they offer that you don’t? If, for instance, they offer lower prices, be ready to explain what your clients receive in exchange for your higher price.
- The agreement. Don’t be afraid to draft an agreement ahead of time—as long as it seems fair to both parties. This way, you get to frame the negotiation, and those on the other side of the table may change fewer parts of the agreement when presented with a first draft.
Something else to keep in mind is the room itself. Everyone wants to host a negotiation on their home turf, but it’s not always feasible. If you can host it, set up the conference room in a way that feels comfortable to you. If you move into someone else’s turf, know they may do the same. Don’t be afraid to move your chair so you can see everyone, ask for help when needed, and walk around when presenting. Own the room, even if it’s not your own. And if you’re negotiations are virtual, you need to create a space that is professional, well-lit, with good quality audio. Lighting and background can be especially critical. You want to look like a vibrant leader with no shadowy distractions.
Be Confident during the Business Negotiation
When it’s time to begin your meeting, do so with confidence. Be assertive, but professional and courteous. Set the right tone to build others’ confidence in you. When you get down to business, keep these techniques in mind:
- Talk, but listen. It’s easy to become so fixated on your response or counteroffer that you don’t pay as much attention as you should. But listening is crucial to understand the needs of the other side and to establishing trust.
- Ask questions. It’s perfectly fine to ask as many questions as you need to understand the terms of the deal, and in so doing, you can also build your partnership with the other side.
- Make the first offer. This puts you in a position of power. Experts say that you’re more likely to get close to your target results if you make the first offer. You can even present multiple offers at once to give the other side options, and to increase the odds of getting what you want.
- Don’t accept the first offer. If they make the first offer, don’t accept it. It’s likely the other negotiator has some wiggle room on their initial offer, but you’ll never know how far they are willing to go unless you counter-offer.
The other side will also employ their own negotiating tactics. One of the most common is the classic bluff. This may be a threat to go with the competition, or to lower their price. Another tactic is constantly pushing you to concede, which you should not do without receiving something in return. At the end of the day, you may need to walk away. It’s better to not make a deal than to cave in to demands that could jeopardize the financial stability of your company.
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