Native leaders and business owners are facing new challenges all across the country. One way native entrepreneurs can prepare for a tough economy is by developing new skills. One of the best skills to have is knowing how to negotiate well.
Successful negotiation strategies can scale your business to new heights and improve your business relationships. Negotiation classes can prepare you to craft better deals with buyers, lenders, and investors. Below are some tips for developing negotiation strategies that can work for you in most situations.
Define Your Goals
Setting specific goals can focus your energy and improve your business negotiation results. If you don't define your desired outcome, you're likely to come away from talks with an unfavorable deal.
Set SMART goals, meaning goals that are Specific, Measurable, Attainable, Relevant, and Time-bound. The more clear you are on your goals, the higher your chance of achieving favorable results. For example, say you're looking for something vague such as "I want a contract with a big multinational.” You may end up accepting a break-even deal that brings you nothing but risk.
Do your homework to come up with realistic and practical objectives. Prioritize your goals to know what's essential for your organization. Also, identify where you can make concessions.
Clarify Your Role
Without proper planning, teams can experience role conflict and role ambiguity. It pays to be precise about what each team member’s duties are. Be clear on how each person’s tasks relate to the organization’s goals.
Negotiation classes encourage trainees to explore how different roles contribute to achieving goals. Think of the step-by-step tasks that make up the negotiation process. Where might you need to add your input? Which procedures require your expertise? Agree with your team on who plays what role and where responsibilities lie. For instance, who signs the final agreement? Who verifies facts and figures?
Know the Other Side
Negotiation is often a collaborative effort to find mutually beneficial solutions. To come to a win-win agreement, you need to know who the other side is and what drives their motivations. Get to know what the other side expects from partnering with you.
Determine what the other side’s best result would look like and what you can do to realize their objectives. Know how you can align the other side's needs with your own. What would your team need to fulfill to support the other side's goals? What would you need in exchange to realize your team's objectives?
Knowing the personalities involved and the needs of the other team can also inform your approach. Will you have to play hardball, or will a softer approach work better?
Even though most times the other side will be cooperative, there are times you may have to talk with adversarial personalities. So, it's vital to know who you will be meeting to determine their agenda.
List Your Alternatives
After early stage pre-meetings, most negotiations will start with a proposal. Then, a series of requests or counterproposals will follow, in a give-and-take process. Having a list of alternatives to the main offer makes it easier to walk away with a favorable agreement. There are two main tools taught in negotiation classes for preparing alternatives, and teams can benefit from both.
Multiple Equivalent Simultaneous Offers (MESO) involves creating a few alternatives that are similar in value. These alternatives make the other side feel like they are gaining concessions. At the same time, you avoid giving up anything that is high value to you.
Best Alternative to a Negotiated Agreement (BATNA) is academic jargon for having a solid plan B. Having a plan B can strengthen your position. If your goals are dependent on only one option, then you are likely to give up more to win the deal. With a strong and actionable plan B, you can walk away and seek a better deal elsewhere.
For example, if your manufacturing company needs packaging, talk to multiple packaging companies. Encourage competitive bidding for your business. When the other side knows their competitors are interested, they are far more likely to lower prices and add more benefits to sweeten the deal.
Stick to Your Code
Very often, leaders and entrepreneurs decide to enter talks "with their gut.” It’s important to pay attention to your instincts. However, many negotiation class leaders and company leaders advise that it's just as important to have a written code. Complex negotiations, such as business acquisitions, can become emotional. Before jumping into a tense situation, consider drawing up a code of conduct for your team.
A code may involve having a set of rules to guide how your organization conducts negotiations. The code may include templates on what can be discussed and terms that are not open to discussion. The code defines who you are as an organization and what your beliefs are. A simple code may look something like this:
- We will share information about our values.
- We will stick to ethical and moral negotiation practices.
- We will not lie to get our way.
- We will not mislead the other side.
- We will uphold the agreements we enter into.