Time to cut costs

How to Become a Better Negotiator

By Andrew Jensen, Business Advisor

Effective negotiating skills are a necessity for all high-ranking employees and business owners. Whereas talks carried out by poor negotiators could be detrimental to your company, successful negotiations often boast win-win outcomes that improve both companies’ well-being. Below you will find some of the top tips for general business negotiating skills:

Do your research.

You’ll likely be very busy in the time leading up to an actual negotiating session, but it’s extremely important that you make time to do your homework beforehand. There are a number of things you should research. First, research your competitors. If the business represented at the seat across from you at the negotiating table is considering doing business with one of your competitors, then it’s important that you give them a reason not to. If you can’t tell them why they should be negotiating with you rather than with your competitor, then perhaps they should turn to your competitor.

Secondly, research the party with whom you’re negotiating. This allows you to focus your strategy on what’s important to them, which puts you in an advantageous position in terms of getting what you want out of the deal.

Finally, it’s helpful to be knowledgeable in a general sense about the subject matter relevant to your negotiations. If you’re negotiating the sale of a pharmaceutical company, for example, know as much as you can about how the pharmaceutical industry has been affected by the economy, health insurance regulations, etc. Research indicates that if you appear authoritative on a subject (which is nearly impossible if you haven’t done your research), other parties are innately inclined to follow your lead. This trend is based in human beings’ subconscious desire to not appear unreasonable (because who wouldn’t follow the lead of an expert?), so use it to your advantage when negotiating.

Don’t offer any “in betweens.”

In negotiations, as with any delicate conversation, you’ll need to choose your words very carefully. The word “between,” for example, should be avoided as much as possible. The common temptation during negotiations is to offer a range of values to prove that you are, in fact, open to negotiating and to show that you are reasonable and fair. However, doing this can actually cause you to make concessions unknowingly. For example, if you start off by offering to sell the other party a product shipment for “between $40,000 and $50,000,” they are obviously going to gravitate towards the lower figure, and understandably so. If you make the low end of the spectrum known from the outset, then you are effectively eliminating the upper spectrum from the realm of possibility. The other party is going to latch onto the lower figure and use that as their negotiating point, and while this is still “on your terms,” as the lower number is technically one that you yourself provided, shrewd negotiators can often talk you down even further, to a figure with which you’re far less comfortable. If you start with a “between,” you’re starting with a concession.

Don’t forget the basics.

Never become so wrapped up in your expectations that you fail to do any actual negotiating. The very fact that you’re sitting at a negotiating table means that you and the other party are both willing to make some concessions in order to establish a productive agreement, so being stubborn on those points that really aren’t that important probably won’t be very beneficial. Recognize that one of the most fundamental principles of negotiating is that both parties will always ask for more than they actually expect to receive. This enables both parties to make concessions and still finish on satisfactory terms, having entered into the situation understanding that they probably wouldn’t get most of what they asked for. The trick to negotiating is to take what the other party has requested and learn to accurately estimate what from that list they actually expect to receive. Over time, you’ll learn to recognize what points are “filler” (requests that have been made mostly so that they can be cut later in the name of compromise) and what points are actually important to the other party. This enables you to eliminate the unimportant points from their demands while still leaving them with enough that they’re satisfied with the deal.

Successful negotiating is a complicated process, and it will take time and practice for you to become a skilled negotiator. However, by internalizing these tips, while still recognizing that every negotiation must be treated as a unique situation, you’ll be in a better position to help your company secure a mutually beneficial deal.