The ability to negotiate a good deal, whether it is your salary or the value of your IPO, is essential for any businessperson looking to succeed. The thrill of making your move, anticipating your counterpart’s next move, all the while keeping your end goal in sight and your strategy intact, is what successful entrepreneurs experience every day.
Everyone goes about negotiating deals in different ways, and it is only through practice that you will find which ways suit you best. But while you are still learning, here are some techniques for you to try out:
Know your priorities
Long before you step foot into the negotiating room you should write down exactly what you hope to achieve from the conversation. If you are negotiating a price, do some research into what the average is and establish the terms and price you will accept and what you will walk away from. Not only will it give you more power and confidence, but it will stop you from throwing a crazy number into the ring in the heat of the moment.
Being guarded in a negotiation situation will ultimately inhibit trust and make securing the best deal difficult. Try and establish a relationship with the other party before you kick things off, as this will allow you to get a feel for the person you are dealing with and build a rapport, helping you get what you want. Share some information and spend more time focusing on reaching a deal, rather than holding all your cards close to your chest, and you will be well on your way.
There is a common misconception that the person who goes first in a haggling process is over-keen and therefore the weak link. However, research from North-Western professors Grant and Galinsky has revealed that people who make the first offer get better terms that are closer to their target price. With this in mind, don’t be afraid to kick off the process.
Throw the rule book out of the window and trust your instincts. There is no right or wrong when it comes to negotiation, as every situation is unique to the people involved. If you hit a wall, think outside the box and look for a way around the obstacles. Just because business can be all about the numbers, it doesn’t mean you should stem the creative and artistic juices. I have secured some of our largest clients and transactions because I have searched and searched to find solutions to their financing problems.
It comes with time
Negotiating is a skill that improves over time and with a lot of practice, so don’t be worried if you have a failed negotiation at least once. It happens to everyone at some point during the business journey and it is how you deal with the failure that is important. I try and view each negotiation as a competition with myself as opposed to one against other people.
How the negotiation goes ultimately comes down to an individual performance, so at the end of each deal, take a minute and think how well you did compared to the last time. Consider where you can improve to make the next deal even better.
Negotiation is important for most people, but can be a daily occurrence depending on what industry you work in, and while it takes time to hone and understand, it will ultimately be key to the continued growth of your business. As you begin to master these skills, you will start to become familiar with the art of business negotiation and will be well on your way to a string of successful ventures.
Rajiv Nathwani is director and founder of Quivira Capital