There are few skills as important as negotiation in business. Many successful business people pride themselves on their ability to turn a deal in their favor. What is it about their negotiating ability that helps them come out ahead so consistently? Here are a few key principles about negotiating to ensure you’re generally getting a good deal.
Don’t Underestimate Research
Ever. In Sun Tzu’s book, The Art of War, he says that almost all battles are won or lost before they even take place. Preparation, he says, is the crucial part of any strategy–knowing your strengths and weaknesses as well as those of your opponent in order to formulate a strategy to approach the situation successfully. In business, one should know the history of the person or group you will be negotiating with. There may be patterns in their negotiations and business dealings that you can use in your favor.
If you were to enter a negotiation over a product, then you need to take the time to understand everything about the product before you meet so as not to be a target for misinformation. By doing proper product and service research, you will have an idea about any issues that surround the deal and prepare accordingly. By knowing the service or product extensively, you will also enter the deal with an appropriate offer in mind. However, the offer you determine beforehand doesn’t need to be your first offer or counter offer.
Don’t Show Your Hand
Your budget and other limitations–or freedom–should never be freely given to the other party before the deal is made. If the other party knows your limitations, they may present you with an inferior product or service, not giving you a chance at the best they have. Even worse, if they know you’re not limited by budget or executive sign-off constraints, you could easily get snookered into agreeing to something that’s less than mutually beneficial.
But Know Your Hand Well
In bidding situations where there are other competitors vying for the position, you have to know what you can offer that they can’t match and use this information to your advantage. Offering extras that don’t have a major impact on your costs can oftentimes really help seal the deal. As an example, you could offer additional parts, accessories or services, depending on the kind of business you run. If the deal you are bidding for is going to be solely judged on the lowest available price, then this strategy won’t be as successful.
Sealing the Deal
To successfully close a negotiation where both parties have a particular number in mind, it is oftentimes necessary to make a compromise to close the deal. While you don’t want to give more than the other party has to give, a middle-ground can often be reached where both parties compromise equally and split the difference in order to make the deal. With the final closing deal in mind, one should always be aware that at some point that final compromise will be necessary, allowing you to set the stage for it with the earlier offers.
Within almost all businesses, deals and compromises will need to be made, making effective negotiation skills an essential part of it. Confidence grown through preparation and learning some key skills can give you a leverage in order to get what you want out of any deal.