To succeed as an entrepreneur you need to also have good negotiating skills. However, to become a truly successful negotiator, you have to learn to put aside pure self-centredness, because if all you care about is serving yourself, you will blow the deal before you even start.
Experts at entrepreneur.com describe negotiation as a delicate balance of give and take. Learning to strike this balance is necessary for any entrepreneur hoping to build a prosperous business. It takes time and practice and a whole lot of patience to hone a winning strategy. And yet each deal is unique and needs to be approached correctly, which is why a one-size-fits-all approach will never work for long.
It is therefore important to know and exhibit some of the skills that will make you more successful as an entrepreneur in any venture of your choice. Entrepreneurs should know that successful negotiations are built on solid prep work.
This means that you may know something about the parties involved and have done a little background check to know about their business and maybe you have even talked to others they had worked with in the past.
This is mainly to get an idea of their strengths and weaknesses. The same is true if you are on the other side of the table and are looking to invest in a product or service. You should have a solid understanding of the pros and cons of the commodity they are selling or the service being provided. The bottom line is, you need to have a good idea of who you are dealing with and what they can offer.
Entrepreneurs must should always go into whatever form of negotiation with their best foot forward. You should be well rested. You should have eaten something, as being hungry may trigger anger unknowingly. You should show up on time so as not to walk in feeling rushed. If you have done the above, you should be feeling positive, knowing that you are going in clear-headed and confident. You will have the stamina and energy to get this deal done.
While you are in and set for the negotiation, consider all the details of the opening offer. This is because the opening offer usually acts as an anchor for negotiations. It is also where the details get hammered out, so it is important that this is done carefully and thoughtfully.
Experts point out that the basic elements of an offer include the offer price, the work being proposed, what goods or services are included, when it will all be delivered and if there are any performance incentives, warranties or terms and conditions.
Obviously, price is a key component to any deal, but keep in mind the other details. They can matter nearly as much in the long run. If you are the one initiating the opening offer, this is your chance to set the stage for the negotiations ahead and start with the upper hand. You will not get what you do not ask for, so be bold! If you are on the other side of the table, the offer is key to seeing how close together you are. So know your bottom line, by deciding on what you are willing to accept. And remember to take a close look at the details. What else are you getting for your money and what else are you potentially signing up for?
Put your ego and emotions under control. It is important to note that while you should have confidence and assurance because you have done your prep work, you also have to check your ego at the door. Letting your emotions run the show will never serve you well. In fact, you should be going in feeling as neutral as you can about the situation. Leaving your ego behind will free you to think objectively during intense bargaining. You can then negotiate from a standpoint of flexibility.
To be successful, you have to be able to think clearly in stressful situations and be willing to work to find common ground. If you walk in with a middle-of-the-road attitude, you are more likely to strike a balance between getting what you want and not giving away too much. On the other hand, you do not want to give something away without getting something in return. Losing your ego and putting your emotions aside will help you find right path forward.
For an entrepreneur entering into high-stakes negotiations, it may be helpful to run through possible scenarios with a friend or colleague. This will help you feel less nervous and it may also show you objections to the offer that you did not think of, or help you see a side of the deal that you did not consider.
Playing through the scenarios, even if it is just in your own mind, may help you feel less attached to the outcome. In order to treat the whole thing as a game, you should care, but not too much. Having a little apathy will help you stay neutral and keep your feelings in check. And remember, negotiations are like anything else, the more you practice, the better you will be.
Understand your strengths and weaknesses very well. Self-awareness is key when you begin negotiations. You are essentially looking for the other side’s strengths and weaknesses. Not in a cruel way, but to help you determine your next play. At the same time, you must also be aware of your own strengths and weaknesses, so you do not allow yourself to be exploited. Try to take an honest inventory of your strong points and vulnerabilities. If your company is small, what is its growth potential? Are you able to be more responsive to the market than a larger company? In short, what can you offer that the other side cannot, and what can the other side offer that you cannot compete with? Knowing where you stand on the negotiation chessboard will help you determine how to land the best deal.
Another vital skill that is needed when negotiating a deal is knowing when to walk away. When you enter into a negotiation with the knowledge that you are willing to walk away if things do not go as planned, you come from a position of strength. That is why staying neutral is key to a successful negotiation. You cannot be bullied into a deal if you just leave. But often we tell ourselves that this deal means everything to us. Our ego is involved, and that weakens our position. It is about mindset. You have to believe that if this deal falls through, you are not losing an opportunity. You are keeping that space open so when a better opportunity comes along you can snag it. If you force a bad deal to happen, you are stuck. You are no longer able to grab hold of something better. And there is no shortage of business out there. So if you are pinning all your hopes on one deal, you may be killing future business.
Try to negotiate in good faith. Whether you are negotiating a long-term business deal or setting up a quick sale, it is natural to feel on the defensive when you begin negotiations. We are all protective of our interests and we want to cut the best deal in our favour. But if you are hoping to walk away with your reputation intact, you need to practice negotiating with compassion and good faith. Engage in active listening and really hear what the other side is saying and asking for. What are the issues that are making them hesitant? Then make sure that you relay your own priorities. This is the basis of a ‘win-win’ solution, when both sides explore each other’s positions and walk away feeling heard and comfortable with the deal that was struck. Even if it appears that you are on opposite sides, there is usually common ground to be had. Maybe the other side has a different goal or an opposing position. But if you look for it, you can usually find mutual gains both sides will accept.
Experts at entrepreneur.com advise that you should know how to close. Negotiations may feel like a game of chance, but they are more like a game of chess. A successful negotiation requires a good sense of timing and the ability to sense the other side’s next move. If you have done your prep work and are bargaining in good faith, you should have a solid idea of what they are looking to get out of the deal. And of course, you should have a clear idea of your own bottom line. So you are either working to bring the sides progressively closer, or the deal is going nowhere. Ask yourself what the endgame is. Can the difference between both parties be split? If both sides are close but a few numbers are hanging up the process, what will it take to shake things loose? If you can strike a bargain that makes sense, it does not need to be perfect.
It just needs to work for both parties involved. If you can get to that point, you have set the stage for the final handshake. If not, you have to be willing to walk away knowing it just was not the right time. And mind you, there will always be another right time, just have faith.