For a small business owner, learning to negotiate a business deal is a skill that must be used in almost every aspect of any business. If a business owner doesn’t learn the skills, they can lose a substantial amount of money throughout the lifetime of the business. Negotiations are necessary when hiring employees, dealing with vendors or suppliers, purchasing equipment, dealing with investors, or getting a loan.
Do Your Research!
Whenever you enter into a negotiation, you should be prepared with research on the parties you’ll be negotiating with, the industry and its growth and trends, and what you hope to gain from these negotiations. You should also be prepared to have a plan B if the negotiations fall through.
Established a Relationship with Trust
Try to bond with the other negotiating parties and form a trusting relationship. Do your best to understand what the other party wants, and you can do that by asking detailed questions to give you an idea of their expectations, current financial status, alternatives, and urgency. You want to be as knowledgeable as possible so you can understand the stakes and encourage the other party to give you enough information to reach your goals
Have Several Options Available
When you negotiate a business deal, make several offers that the other party can choose from. They can be similar and equally fair, and the other party will appreciate being able to choose an option that works best for their specific situation and needs. Offering multiple options will also increase your chances of one of them being accepted. If an offer is rejected, try to learn immediately what the objection is. Most often, objections can lead to a counteroffer that allows both sides to still feel like they got something beneficial from the deal.
Think Creatively When Negotiating a Business Deal
Almost anything is negotiable. When you are participating in negotiations, be ready to be creative in what you can offer or desire. If you get a specific price in your head, don’t get too focused on that price. You might be overlooking a solution. If the other side counters with a lower price, try getting them to offer something additional to the lower price. Or maybe you should be offering something to the other party that may be of value to them. Keep your options open when you negotiate a business deal.
What Can Be Bartered or Used in Business Negotiating?
Instead of offering more money, maybe you can offer some inventory of something that isn’t currently selling well. Maybe you can creatively offer some storage space. It could be the other party doesn’t have many contacts, but you could supply them with first-hand contacts and referrals. The main point here is that there are many skills or items or services that can be offered or accepted to successfully negotiate a contract or deal.
Don’t Dismiss Discounts
If you are new in your small business and haven’t built a reputation yet, the people you will be doing business with might be hesitant to work with you because you haven’t gained their trust in you yet. If this is the situation, you can offer them a discount for a certain amount of time until you have proved to them that you can deliver what you promised and that they can count on you. After this trial period of one month – three months – six months, or whatever the two parties decide on, you will begin charging the normal price. You can even write the terms of the negotiations stating that if you fulfill your obligations during the discount trial period, then they have to continue business with you for the next quarter, year, or whatever time period is agreed upon in the negotiations.
Don’t Be Afraid to Walk Away from Negotiations
Sometimes the other party in a negotiation has it in their minds that whatever it is they have that you want is so important to you, you will do or pay anything to get it. This makes them unreasonable, and you don’t want to walk away from the negotiations feeling like you have been ripped off. The best negotiations leave both parties feeling that they received something beneficial. If the other party is being completely stubborn and unrealistic, don’t be afraid to just say ‘no’ and walk away. You should already have decided how much you are willing to give for whatever it is the other side wants, and how badly you need that product or service. If it’s something you can live without and their offer is insurmountably unfair, consider backing out of the potential deal. Maybe they will offer you a better deal or maybe that will be the end of the negotiations. At that point, you just have to decide what is best for you.
In most business deals, there is usually room for negotiating. If you never negotiate and always accept the first offer, there’s a good chance you are losing out on something valuable such as profits or income. Do your homework before negotiating and try to be creative before the negotiations begin so you can offer options the other side has not considered yet. Anyway, what have you got to lose?