Tips to Help Improve Business Negotiation
Negotiation is an essential part in almost everything you do whether it be business or everyday life. You may not realize this but you negotiate with your spouse, kids, business partner, contractor and attorney daily. Some negotiations are worth thousands of dollars and others are strictly for principal. It is human nature to try to win every negotiation we are part of regardless of what you may have at stake. The best negotiators know that it is not how fast your talk or the tone of your voice that has an impact on the result. Some of negotiators do that separate. There are several things that seasoned negotiators do that separate them from the majority. They do this without raising their voice or speaking at 1000 MPH. Here are a few tips that will help anyone improve their business negotiation.
Discover Motivation: In every negotiation there is something that both sides will want for the desired outcome. With that there is usually a motivation behind the following desires. A bank often tries to get the highest sales price or the quickest transaction. A distressed homeowner may need to sell to avoid foreclosure or because they are in the midst of a dirty divorce. An Attorney may be trying to squeeze every last cent at closing. Whatever the case may be it is very important to discover the motivation of the other party. The motivation will drive their actions, requests and different scenarios. It will push them closer to an agreement or drive them farther away. You can usually find their motivation by doing a little bit of research or simply asking the right questions at the right time.
Walk away number: As you enter in a negotiation it is important that you know where to draw the line. Many investors that go to live auctions get caught up in the process and before they know it there are in bidding war thousands of dollars above their desired price. They didn’t have a walk away number in mind before the process started. Regardless of what your number is or what you are negotiation for you need to know when you walk away. This isn’t being stubborn or unreasonable but rather measured and responsible. If things get too heated or the ends don’t justify the means it is ok to walk away.
Never make threats. Have a walk away number and making threats can often go hand in hand. Everything that you say in negotiation can and most likely will be used against you. If you say that you are opposed to something and later you are open to it, nothing else you say in this negotiation will be taken seriously. When you say that you will not go a penny higher or this is your absolute bottom line you had better mean it. Any blanket statements like these should be at the end of the negotiation and only when you feel things aren’t getting anywhere.
Give to get– The Best Negotiations are ones where both parties feel as if they have one. Even when you have the upper hand you never want to completely steamroll the other side. If they feel they are being taken advantage of they will most likely try to find an alternative. One of the best ways to wrap up a negotiation is by offering up a small concession. Not only is this seen as a sign of flexibility but it gives the other party something of value. They may want you to pay for the closing costs but rather you counter that you would pay for some of them. They may want you to go to their number but instead you increase your offer slightly. By being flexible and open minded you can get more negotiations to the finish line.
Focus on Positives- There are two sides to every negotiation. Most people focus on what they are giving up rather than what they are receiving. Your goal should be to constantly focus on positives of what you are offering. If you are looking to buy a property at a discounted price you need to focus on your ability to close fast regardless of the issues regarding the property. Constantly point out any work that needs to be done, the cost of repairs and the limited pool of potential buyers. The better you are at pointing out and explaining the negatives the more likely they will give in and agree to your proposition.
Don’t take ANYTHING Personally– There is plenty that is said and done negotiation. It is important that in any business-related environment that you understand that this isn’t PERSONAL, this is a BUSINESS. You are trying to run a business and when you make it personal that’s when problems start. It is important that you understand that this is a part of the deal and business and you shouldn’t take anything too personally. If someone make you a low-ball over you shouldn’t be insulted by it and cut off communication. On the brighter side you also need to recognize what may be insulting to the other party. Not everybody may have thick skin as you do. By nickel and diming the other side you can lose their trust and make the negotiation more difficult.
Negotiation is a cat and mouse game where the more controlled person usually wins. If you are negotiating with someone you frequently work with such as a contractor, attorney or real estate agent you should try to be as fair as possible. Winning the negotiation can cause you to lose a valuable partner.