There are a few basic steps that you must understand and take in order to prepare yourself for the business negotiation.
What is your bargaining position.
It is extremely important in a business negotiation to know what position of strength or weakness that you are operating from. 1st of all, it is advisable to be in a position of strength rather than weakness in order to have a successful negotiation. For example, let us say that you have found this great piece of real estate which is just perfect for your business. The problem is that the rent is really high and more than what you would like to pay. However, this piece of real estate happens to be in a really popular area of commercial real estate and many other businesses are vying after the same deal. This puts you in a weak negotiating position because the landlord knows that he does not have to reduce the rent for you or Negotiate with you because he is likely to find another larger and cash-rich business that will pay him the rent that he wants.
It is important to understand what negotiating position you are in because while you may be in a weak position, you can come up with some sort of trade-off which will allow you to negotiate in your favor. Taking the example above, you may offer the landlord a certain bonus at the end of the lease year from your business profits. This might tilt the deal in your favor. It is hard to negotiate from a position of weakness and once you understand what your position is, you can work on it and points of strength.
Get to Know the Perspective of the Other Side
It is extremely important to know the perspective of the other side when negotiating. The better you understand where the other side is coming from, the better you will know what steps to take and how to negotiate the best of your business interest. Taking the same example as above, let us say that the same commercial real estate property has been vacant for a long time. If you find this out, you would probably know that the landlord is desperate to get somebody to take it on rent. This will automatically put you in a stronger negotiating position to turn things in your favor.
Similarly, whenever you are negotiating and you are excited about the deal and it is something that you want, never show your enthusiasm. Just like in a poker game where the players can change the game in their favor not just on the basis of how good their cards but also by making other players believe how good or bad their cards are, you can do the same with the business negotiation process. Even if the deal is something you really want, you can make the other party believe that it is not something you really want or you will walk away from it if they do not consent to the terms and conditions that you want. If they feel this is true and everything else about you and your business prospect comes from a position of strength, there will be more willing to negotiate and compromise on their own conditions and demands. The idea is that not only you but the other side should worry about loosing the deal if they do not agree to your terms and conditions.
Figure out Your Negotiating Style
There are ways in which you can negotiate a business deal. You can be aggressive in your negotiation method or you can choose to be the calm and matter-of-fact person. In most cases, a person is suited to one particular style of negotiation which he is best at. However, many good negotiators use a blend of tactics for maximum effect. For example, being almost always aggressive in every situation can be counterproductive. Sometimes being silent and raising the anxiety of the other party by not saying much and not responding to their aggressiveness can be most effective. Even when it comes to being aggressive during negotiation, there is a skill attached to it. Remember that it is a game.
Personally we do not recommend shouting and screaming during negotiation even though many people use this technique to great effect. You can be polite and convey your willingness to get the deal done. One of the most important thing during a negotiation is to stay calm and not panic.
Remember, you can never truly negotiate on something that you really want. So even if you really want the deal needed for business, your negotiation should always come from a place where you act and behave like you really don’t need it and can just as easily walk away from it. Even if you cannot really afford to walk away from the, at least pretend that you can. An effective negotiation usually involves doing the following.
- Convincing the other side that you do not need the deal so much,
- Convincing the other side that they need the deal more than you do and
- Any combination of the above points.