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Unfortunately, many business executives underestimate the importance of negotiation. Rather than prepare, plan, and brush up on their negotiation skills, they opt to “wing it” through the negotiation session and rush to the bottom line. Such an approach results in unfavorable outcomes for both parties.
When negotiating, all business people must remember that everything they want is currently in the hands of someone else. Whether you’re buying or selling property, equipment, or professional services, the other person has the money you want for the item or the item itself. Therefore, the key to getting what you want from the other party is mastering the art of making others happy in a way that’s agreeable to all. That’s what negotiation is all about.
If you want to leave your next negotiation meeting with more favorable results, enhanced credibility, and a more thorough knowledge of the other party, put the following negotiation strategies to work. After all, the more time you spend in preparation, the easier your negotiation will be.
Know What You Want And What You Will AcceptPrior to any negotiation, clearly define all the terms that you are willing to accept and the conditions under which you will accept them. Keep these terms specific, yet be flexible to changes. Once you have a clear definition of your essential terms, you can progress your negotiating strategy from there, knowing that the negotiation will better your position and terms. When you neglect this step, you often enter negotiations with a sense of indifference. The other party will sense your uncertainty and won’t take you or your contract demands seriously. That’s why it’s important to stay off the fence and state your position upfront.
Make A Realistic OfferThere are both good and bad ways to achieve the terms you want in negotiation. Some business people think coming in with a ridiculous lowball offer is the best strategy. They hope that by presenting an extremely low offer, the other party will negotiate to raise the offer while bringing the original asking price or terms down. This is a miserable way to negotiate, as it alienates the party receiving the lowball offer and insults their products or services. Instead, savvy negotiators build a reputation of being a fair player. They know that consistently giving unrealistic offers makes them appear less than honorable and that doing so will limit the number of contracts they are able to close.
Listen To The Other Party’s FeedbackAs the other party responds to your contract requests, ask questions and listen to the answers. Some great questions to ask are: “What are your concerns with these requests?” “Which areas do you feel are unreasonable and why?” “Which points are you comfortable with and why?” Asking and listening are important because you will always get what you want if you allow the other party to do the talking. All you have to do is sit back and listen. The other party will always hand you the keys to getting the transaction done. You simply have to act on what they say.
Don’t Make It A Price NegotiationDuring a negotiation, business people often say something like: “What’s it going to take to get this deal done?” or “Where are we on price?” Today’s business world is very impatient. We try to get to the bottom line much too quickly. However, when price becomes the only issue, you limit your negotiation options and give the other party the impression that “this is my best offer; take it or leave it.” To avoid this, be sure to stress other important factors during your negotiation, such as warranties, follow-up, delivery dates, and any other items that are important to the deal. When people understand all that they are getting for the money, the final price won’t be so much of an issue.
Rely On Yourself, Not On LuckRegardless of what happens during a negotiation session, luck has absolutely no bearing on the outcome. Luck is simply the moment when opportunity and preparation meet. If you take your time and master the art of data gathering, of knowing your client prior to negotiating, and of conducting objective risk analysis, then you will always close the deal to best meet everyone’s needs.
Be A Problem SolverPeople instinctively move toward things that give them pleasure and away from the things that cause them pain. As such, the person you are negotiating with wants to take actions that result in happiness, as do you. If you are gaining pleasure from the negotiation but your terms are causing pain to the other party, it is going to be a frustrating negotiation, and you are probably not going to get what you want. Therefore, you must uncover what pleasure the other party wants to gain as a result of your transaction.
If you encounter indifference, then it’s time to walk away, because you will spin your wheels forever. Outright opposition is better, as it tells you exactly where the pleasure and pain are, and how to make the deal happen. At that point, you will know what you need to do to create a win-win situation, and then you can build on it. One way to do this is a tradeoff play, where you offer a concession.
You could say, “I may be willing to do it for you, but what would you be willing to do for me in return?” You are essentially saying, “I’ll give you some pleasure if you give me some pleasure.” You can now solve the other person’s problem while you get what you want.
Observe Body LanguageWatching the movements of the other party can disclose a great deal about the words that they say. For example, if they are unable to look at you when they are talking, then they could be hiding something. If they are fidgeting in the chair, they could be very uncomfortable. If they sit back and fold their arms, they could be tuning you out. If they are sitting forward on the edge of their chair, they may be eager to hear more. You can also use your body language to communicate to your partner in a transaction. So if you feel the negotiation is going poorly, you can both agree to call it quits with the other party without ever speaking a word to each other.
Believe In Co-Authorship To WinOne of the best strategies for negotiating is to get everyone involved in authorship of the contract together. To start a negotiation by saying, “This is our standard contract and we must use it,” sets up a tough negotiation session. A better approach is to offer to start with your standard contract to get things going and then allow for a follow-up discussion on any changes the other party wishes to make.
Also, during negotiations it’s often advantageous to offer something to the other party so you can build trust. For example, you could ask if they would like to start with their standard contract for you to review. Failure to get everyone’s input upfront may kill the deal at the starting block.
A negotiation should never be a negative experience. When you brush up on some specific negotiation skills, you can make any negotiation session a productive experience that enables you to get what you want more often. Negotiate wisely today so you and your company can get the best contract every time.
Al Auger is an expert in commercial real estate developing, investing, and financing. He is the author of Pure Profits: Pinpoint Winning Properties, Think Like an Investor, and Succeed In Commercial Real Estate. He can be reached at 407-304-4717 or at www.alauger.com.
Publication date: 08/11/2003