5 important business negotiation strategies

No winners or losers

Business negotiation is a world of contradictions. You’ve got to be firm but flexible. Open and sharing, but a little cagey. There’s a lot to get your head around. But your state of mind might be the most important thing. Aim for a mutually beneficial outcome and you’ll find the whole exercise more comfortable. Follow these five tips to prepare for your next negotiation.

1. Do your homework

Before starting business negotiations, always do your research. You should come to the table understanding as much as you can about the company you’re dealing with – and the industry they’re in.

  • Learn the main terms and concepts they’re likely to use so you’re not confused or intimidated by jargon. But if something comes up that you don’t understand, it’s okay to ask for clarification.

  • Familiarise yourself with their products or services, their industry and their competitors. It’ll give you a sense of their strengths and weaknesses, and help you predict what’s negotiable. Social media is a great tool for this type of research.

  • Understand your position. It’s important to know what you bring to the table, and why they might prefer to do business with you. Money isn’t always the main factor. Perhaps you’re easier to work with because you’re close by or more responsive. Don’t be afraid to promote the things that set you apart.

2. Don’t be anchored

Being the first to say a number can be a good way to take control of a business negotiation. That first figure often becomes a reference point for the rest of the conversation.

Some negotiators will open with an extreme number – either very high or very low. They’re hoping the other party will be anchored by it.

If you find you have to move someone a long way from their original position – and that makes you feel uncomfortable – you’ve been anchored. It probably happened when you bought your first car.

This can be a confronting tactic and it may not suit your personal style but – even if you don’t want to try it – you should be aware of it when someone tries to anchor you. If that happens, don’t feel awkward about saying you’re a long way apart. It’ll send the message that you’re not going to be steamrolled.

3. Know where you can compromise

As a small business owner, you may need the deal more than your negotiating partner. Be realistic about that. Don’t let your pride get in the way.

Decide what you need from the deal to make it worthwhile and be prepared to compromise on everything else. You can do this strategically.

Identify opportunities to give way on your least-valued terms and communicate it clearly when you do. Don’t whine about it – just make sure your negotiating partner can see you’re moving. They’ll be more likely to reciprocate with their own concessions.

4. Aim for a win-win (be nice)