How to Prepare for your Next Business Negotiation?

Business meeting

Business negotiation is a difficult skill to master. A lot of focus is put on when you are in the room, but a successful negotiation starts long before that. To ensure you make the most out of your next negotiation here are some simple yet important steps you can take.

Managing Expectations

The first thing to do is to ask yourself, what is the most I can expect to gain? Consider the market conditions and who you are dealing with and based on that, make an informed and reasonable estimate about the terms of a good deal. This is the optimal scenario and the most you could reasonably stand to make. But odds are you may not, in which you need to consider the next question:

What is the minimum acceptable amount? Below a certain threshold amount, a deal is not economical and not worth making. If someone makes an offer below this amount you should obviously not accept it. The whole point of a negotiation is to avoid a bad deal so you must be crystal clear on your reservation price. If you stick to these steps you can ensure that you will end up with a deal that you are satisfied with.

As mentioned in The Negotiation Book by Steve Gates, founder of The Gap Partnership, there are six primary variables than must be considered.

  1. Price (How much will I be paid?)
  2.  Volume (How many – Which Products?)
  3.  Delivery (When, Where and How Soon)
  4. The Contract (The length and conditions of the contract)
  5. Payment terms (When will I be paid – What currency – Down Payments?)
  6. Specification (The product – What is included in the deal)

For a negotiation to be successful you should consider all of these factors to decide the true value of a deal and not just consider the headline price.

Cultural Values Matter

Due to the international nature of trade, you must pay attention to cultural values and act to ensure you respect them. For instance, as mentioned in The Negotiation Book, when an oil company secured a permit to drill in Hobbs, New Mexico, they had to enter intense discussions with Native American Indians who owned the land. After 6-months negotiations ground to a halt due to a lack of cultural understanding between the parties. Quest, a large oil refinery company with links to the deal sent in their expert negotiators with experience of dealing with Native Americans in and the deal was completed in only 2 weeks. This success can be attributed to the respect and broader view taken by the skilled negotiators.

Do your research

Knowing the basic facts such as with whom, what and why you are negotiating is key. If you attended a negotiation without having thoroughly researched the surrounding conditions and terms of the deal as well as the people you are dealing with you will look underprepared and put yourself at a disadvantage. It also means that you will not have the ability to spot flaws in the other company’s arguments and you won’t have the opportunity to counter-argue their points, ultimately resulting in a worse deal.

Training

To become a complete skills negotiator, you can always turn to professional help. Business such as The Gap Partnership provide professional negotiation consulting in both the UK and USA to make sure you are as well prepared for tough negotiations as you can be. A negotiation course will provide you with the background theory of negotiations, give you tactics and tips on how to best implement these and allow you to practice these skills in simulations so that you can be fully prepared when it comes to the real thing. ­­

Have a plan B

Finally, while it is good to have a clear picture of what you expect to happen during each negotiation, things don’t always turn out as planned. It’ll be a test of your ability to deal with new information that alters the course of the negotiation as well as your ability to adapt your position accordingly.

This ability to be flexible in how you deal with these situations as well as how you present your side of the argument is what may decide the outcome of the negotiations.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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