How to Negotiateby Oudraa S
As an entrepreneur, knowing how to negotiate and how to do it effectively are invaluable skills to possess. When you’re trying to sell a product or service to a potential customer, being able to negotiate while not appearing too pushy is important. You don’t want the potential customer to feel as though you’re just “trying to make a sale” from them, even if you are.
There are specific skills that are attributed to a good negotiator and the good news is that these skills can be learned! Knowing when to negotiate will also fare you well in the business realm because timing is everything. A good negotiation session could be the difference between a sale, or a rejection coupled with a negative review. Negotiation skills are essential for any professional. They are a key to success in business and personal life.
Keep reading for more information on how to negotiate and how to do it well!
What is a Negotiation?
A negotiation is a process of exchanging offers, counteroffers, and concessions to reach a mutually acceptable agreement. The objective of negotiation is to reach an agreement that satisfies all parties. This can be done by using tactics such as persuasion, compromise, or respectful confrontation. Offer negotiation is a specific type of negotiation that involves the process of negotiating the terms of an offer with the offeror. The outcome of the negotiation can be to accept or reject the offer, or to come to a mutually acceptable agreement. In order to successfully negotiate an offer, one should know what they want and what they are willing to give in return.
Negotiation is a skill that can be learned and practiced. The more prepared you are for a negotiation, the better chance you have of coming out on top.
When negotiating, there are four things to keep in mind. Firstly, you need to set the stage for the negotiation by being clear about your goals and needs. Secondly, be clear about what you're willing to offer or concede, as well as what your limits are. Thirdly, understand the other person's position and why they might want or need something different from what you're offering them. Lastly, know when to stop negotiating and when to walk away from a deal if it doesn't feel right for any reason at all.
What is a Negotiator?
A negotiator is a person who negotiates for their best interests or on behalf of another party. Negotiators come in many forms and may present as an entrepreneur, an employee, or a consultant. They are usually skilled communicators with notable interpersonal skills and able to use their negotiating skills to reach agreements with other parties. Negotiating is a skill that can help you in every aspect of your life. Whether you're negotiating a raise, negotiating with your spouse, or negotiating with someone at a car dealership, there are many benefits to being able to negotiate well.
Some people are natural negotiators and have an innate ability to get the best deal for themselves. Others are less naturally inclined, and therefore need to work to perfect their negotiation skills. Alongside possessing certain skills, a good negotiator also knows when to negotiate, how to negotiate, when to accept an offer, and also when to reject an offer. This knowledge ties together to lead a good negotiator into a session – directing them towards what they do and do not want.
Negotiation is an important part of every business. It can be a challenging process, but it is an essential one. Negotiating can be done in different ways using a variety of tactics. A good negotiator will be confident and know how to go after what they want. They won’t be discouraged by rejection or resistance because they know it is a part of the process. Good negotiators accept that some things are out of their control, which is also attributed to an individual that is mature enough to properly assess a situation and act accordingly.
Skills of a Good Negotiator
Because everyone is different, the skills of a good negotiator can vary from person to person. One person may utilize their communication skills in a certain way while another will display these same communication skills differently. The key here is to understand your strengths and play them up in negotiation. If you are personable, use this to your advantage and focus on building immediate rapport with the other party. This can help the other party let their guard down and feel more comfortable with you. With less tension, the other party will be more receptive to hearing your side and possibly agree to your requests.
The skills of a good negotiator include:
- The ability to communicate effectively with others
- Knowledge about your product or service
- Knowledge about the market and competition
- The ability to anticipate potential problems
- Good non-verbal communication: maintaining proper eye contact, open body language, regulated tone of voice
- The ability to actively listen
- Constructive empathy; being able to put yourself in the shoes of the other party to better understand their perspective and needs
- Excellent interpersonal skills
- Confident and assertive
- Being goal-oriented
- Being prepared to walk away
- Being open to compromise
This list is non-exhaustive as there are many attributes that a good negotiator possesses. It’s up to you to determine if you have these skills and if not, figure out how you can nurture these skills out of yourself. The ability to effectively negotiate with optimal results is something that is developed over time. The more you do it, the more you learn to understand the nuances and anticipate the needs of the other party. When you show you are confident and passionate about your product or service, people believe you and want to believe in your product or service as well.
Tips to Keep in Mind When Negotiating
The art of negotiating can seem daunting at first. You need to be able to recognize cues from the other party to properly navigate the conversation and hopefully swing it in your favor. When negotiating, don’t be afraid to ask for what you want. If the other party says no, then ask for or present something else that might work for both of you instead. Be prepared with a list of things that are important to you and why the product you are offering is great.
Also keep your “bottom line” in mind before entering a negotiation. Your bottom line is considered the final offer you are willing to accept or how low you are willing to go. For example, if you are negotiating with an investor on the percentage of your business they will be entitled to, you may identify your bottom line as “10%”. You don’t ever share your bottom line with the other party because you will want to try and negotiate a better deal. In this scenario, you may start off by offering the investor 4% in your company.
If they decline, you may offer 6%. If they decline again, you can say that your best offer is 8% and you can’t go any higher. If the investor insists on 10%, you can agree and it’s a win-win. The investor will think you went out of your way and were overly generous by offering 10%, and you would have still gotten the deal you wanted knowing 10% was your bottom line offer all along.
During a particularly intense negotiation, don’t forget to always keep your cool. If you get emotional, you’re likely to make poor decisions or blow up. This will decrease your credibility and may put the other party off completely from wanting to communicate with you. Remain calm, breathe deeply and don’t be phased by negativity. People have different personalities so learn their ways and understand your differences before negotiating with them. For example, some people might not like to talk first whereas others will take the lead in negotiations.
Either way, find out what they prefer so that both parties come out ahead of the negotiation. Many people like engaging with the other party in a negotiation before making any offers. Others might want to make an offer first, and then engage in dialogue about the offer afterwards. It all depends on both parties and how they operate.
Always do your research and be as prepared as possible. That way, you’re less inclined to concede out of fear, surprise, or misunderstanding! Although every negotiation is different, these are some general tips that you can follow to increase your chances of success.
When to Negotiate
This is a tough question that many people have trouble with. It's important to know when to negotiate and when not to. If you are negotiating for something that you really want, then it's worth it to try and get the best deal possible. But if you're negotiating for something that you don't really care about, then it might not be worth your time. You should also know when to continue pushing your product or service and when to fall back. As previously mentioned, you don’t want to overwhelm your potential customer or investor, scaring them off completely.
Timing is everything.
If you are in a situation where you need to negotiate, make sure that the other person knows why they should give in. You should also be clear on what the other person wants from the negotiation so they can feel like their needs are also being heard and respected.
When to Accept an Offer
Knowing when to accept an offer is just as important as knowing when to negotiate or reject an offer. However, it’s not always easy to know when to accept an offer. There are many factors that may influence your decision. Regardless, it’s crucial that you take the right amount of time to contemplate an offer before making a final decision.
Some of the factors you should consider before accepting an offer include:
- How the other party wants to accept your product or service
- The obligations you will have if the other party accepts your offer/terms
- How much money the other party is offering
- How long it will take for you to deliver the promised product/service
- How long it will take for you to receive what you’ve been promised (i.e. an investor is promising to provide you with their investment funds within 3 months)
- Whether you or the other party can negotiate the terms of the offer once it has been accepted
Never feel pressured to accept an offer. Depending on what you are negotiating, there could be a lot at stake and you don’t want to make any rash decisions. You are in the driver’s seat so don’t let the other party pressure you into accepting an offer or deal you feel is not ideal.
When to Reject an Offer
In the same vein of knowing when to accept an offer, you should also know when to reject an offer. Since your agreeance may come with certain obligations, you need to be sure before accepting an offer. If you feel as though accepting an offer is detrimental to you or your business, reject the offer and try to negotiate better terms, or reject it and walk away.
There are certain situations where it’s best to turn down an offer:
- You will lose money if you accept
- The other party is not clear on their offer or obligations
- You do not trust the potential relationship between yourself and the other party
- You have to compromise the needs of yourself or your business
- Your brand could be tarnished by accepting the offer
- The company or investor looking to partner with you has a negative reputation
- It just doesn’t feel right — always listen to your gut (even if that makes rejecting an offer for the time being and revisiting at a later date)!
It may be a good idea to reject an offer if you feel like it would be a step backwards in your business or personal growth. Remember, the decision is entirely up to you, so don’t ignore that.
How to be Confident When Negotiating
As previously noted, being confident is extremely important when negotiating. You want to give off the sense that you know what you are talking about and why the other party should believe in your business. Some may struggle with exuding confidence but don’t worry, this is a characteristic that can be developed over time with practice.
The first step to being confident is in the preparation.
The most important thing is to know your product or service in detail. If you're not knowledgeable about your product, it will translate, and the other party will lose confidence in you as a whole.
Secondly, it's important to have a clear goal in mind before even entering a negotiation. This way, you can focus on the outcome and not have your attention pulled away by other thoughts.
Finally, make sure that you are well-rested and hydrated before going into a negotiation. This will help with your energy levels and make you feel more confident. The best way to build confidence for a negotiation is to actually do it as often as possible. Whether you trip over your words, or go blank in the middle of a negotiation, keep going. Mistakes build character if you learn from them. And remember, negotiations are like a more formal conversation so try not to be so tightly wound during them. If you relax, your mind will be at ease and the session will likely flow much better.
Do you like negotiating? Comment below with your favorite tips and tricks!