Negotiation

As a small business owner it is possible that at some point in the future you will find yourself entering negotiations with another company, perhaps because you have become so successful that you wish to buy a competitor or because you feel it is time to sell up and move on. Negotiations are delicate processes that take a long time to conduct and often fall apart, sometimes even in the final stage. Here are some useful tips that may come in handy if you ever have to participate in negotiations:

  • Have clear goals in mind going into the negotiation process and do not lose sight of them. If you remain mindful about these important issues you will not mind conceding the smaller things
  • Do your research going into negotiations as it could provide you with the upper hand if the other party has a weakness that you able to find out about
  • Use psychology to understand the aspirations of the other party. If you are buying a business the owner may feel loyalty to their staff, so if you demonstrate the measures you are putting in place to safeguard their employment it will reassure them
  • Try to have a team of strong negotiators (senior management or good salesmen) who can make a positive impression on the other party. You can role-play the negotiations beforehand with them to get some idea about how it is likely to go
  • Do not make your opening offer too early into the negotiation process. After getting to know the other party well, you may come to find that your planned opening gambit is inappropriate and you can adjust it accordingly
  • Make sure your opening offer is credible and does not undermine the other party. A well delivered serious offer sends a clear message that you are close to sealing a deal. Try to be the first to place an offer on the table as you will gain a huge advantage in setting the tone for the rest of the negotiation (although you may rarely miss an unexpected great first offer from the other party)
  • Avoid indecisive language like ‘we are hoping for / would like’ as this will make you seem lacking in focus or weak
  • If you encounter an offer from the other party that is so far removed from your own objectives it offends you, let them know this in order that their next offer is vastly improved. Do not be rude to them but make sure you convey the message through the words you choose and the body language of you and your team
  • Plan beforehand the concessions you are willing to make to close the deal. Try to make the other party concede first and try to arrange it so that the concessions you make are actually not a huge loss to you but would be a huge benefit to them
  • Do not be reluctant to remove yourself from negotiations (even at a late stage) if you are unable to satisfy the main objectives you had at the start. Although it may feel like you have wasted your time, in the long-run you could seriously regret making an unsatisfactory deal if you settle for less than you wanted

Hat-tip to Robert Moore from Business Data International Limited

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