Negotiation – are your methods the best?
Negotiation is part of everyday life for entrepreneurs – deals with suppliers, customers, stockists and employees, all have to be done to get a new business off the ground and keep an existing business relevant, so enabling it to grow and continue growing – and it’s a skill that doesn’t come easily to everyone.
There are three broad categories of negotiation – rational, soft and hard, explains Dr Connson Locke, from the London School of Economics. Rational is very unemotional and uses logic; soft focuses on trying to make a connection with the other person; and hard is “what you see in the movies – the aggressive, assertive, pounding on the table”.
A 2013 study from the University of Oxford examining the negotiation behaviour of entrepreneurs, found that small business owners use persuasion and express emotion more than non-entrepreneurs. Perhaps because of this assertive behaviour, they closed fewer deals than non-entrepreneurs – but those that they did close were at a higher profit.
Negotiating with larger companies, who will often refuse to negotiate on terms, can be difficult for small business owners, but if you’re creative it is often possible to find a way. People in far stronger positions like to say no because they think they hold all the cards. Try to have an immediate counter-suggestion. The most effective negotiators approach the deal with multiple options. If it’s still non-negotiable, ask “What will make it negotiable?”
Having a good relationship is key, particularly for entrepreneurs who are likely to make multiple deals with the same party. For this reason, high-stake negotiation should be done in person, which is becoming rarer in our technology-driven business world.
For those that do feel anxious about the prospect of negotiation, consider the DEALS method as a guide to each stage.
Discover: Do your research about everything regarding the issue that is going to be negotiated, and consider the other party’s perspective as well. What do they want to achieve?
Establish: Set some boundaries. Know how far you can you go on every issue. Write this down so that you won’t agree to something you’ll regret in the heat of the moment.
Ask: When you are ready to make a proposal, do it in the right way. Give yourself some wriggle room, and plan your options in advance. Ask them questions about their position too.
Lead: Be in control of yourself, be disciplined, and be clear about what you ask for, without being overly aggressive.
Seal: Negotiation doesn’t end at the handshake. Get the deal in writing as soon as possible and plan for failure now. Add a clause about what the process will be if there are issues – it is harder to negotiate this when you’re in the middle of it.
Are you using the most effective negotiating method for what you want to achieve?
Adapted from an article by Emma Sheppard, guardian.com