In life and in business you don’t get what you deserve you get what you negotiate. Yet many business owners don’t take negotiation studies seriously. They seem to believe that good negotiators are born not made. You either have it or you don’t. This is simply not true, the best negotiators are highly trained in the art of negotiation.
However, most business owners don’t need to be especially highly trained negotiators in order to improve the outcomes of their negotiations. They just need some basic training and a simple formula to follow in order to get better results.
Like it or not you are a Negotiator. Negotiation is a fact of life, you discuss raises with your staff, trying to agree with a stranger on a price for a house, two solicitors try to settle a lawsuit arising from a car accident, you try to get your suppliers to reduce their prices. Even getting your kids to go to bed when asked, all of these are negotiations.
Negotiation is a basic means of getting what you want, from others. It is back and forth communication designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed (as well as some that may simply be different).
More and more occasions require negotiation, conflict is a growth industry. Everyone wants to participate in decisions that affect them, fewer and fewer people will accept decisions dictated by someone else.
Although negotiations take place everyday, it’s not easy to do well. Standard strategies for negotiation often leave people dissatisfied, worn-out, or alienated — and frequently all three.
In the UK the Centre for Economics and Business Research estimated that businesses lose £9 Million pounds per hour due to poor negotiation practices and that turnover of UK businesses could be improved by £17 Billion a year through better negotiation.
Having pointed out how much improving your negotiating skills could be worth, it’s still important to recognise that a lot of business owners tend to get nervous when it comes to negotiation—they hate the feeling of pitting themselves against another person to get what they want.
But negotiating is just like any other skill. You get better at it over time if you practice, learn the theory behind it, and build on your approach as you go. There are plenty of specific tactics you can use in a negotiation (check out my blog on the 5 phases of a successful negotiation), but know that tactics aren’t everything. It’s just as important to have an overarching strategy and an understanding of how to approach the negotiation in the first place.
Here are four points to help you start on your journey to a better understanding of negotiation:-
- Planning and Preparation is everything.
What you do before you enter the negotiation phase matters more than anything else. It’s a good idea to prepare by writing down the key issues in a one-page brief. As a minimum, you should put down the issues, the interests of the individual parties, what’s at stake, and what each party is trying to achieve.
The process helps clarify your own issues and interests.
People often get these two areas confused, and they end up negotiating the issues without really thinking about the interests. They don’t stop to consider what’s actually important to them in the negotiation, and they wind up spending too much time and effort on details that don’t really matter.
Know your BATNA.
What is your Best Alternative To a Negotiated Agreement? Yes, you’ll be hoping the negotiation is successful, but let’s be realistic, not all negotiations work. So before you start negotiating, knowing what your (BATNA) or fall back position is, is key.
Remember that 80 percent of your success in negotiating depends upon the quality of your preparation. Poor Negotiators are unprepared.
- Scarcity drives deals. (Deadlines matter).
Creating a sense of scarcity is the single most important action you can take in a negotiation. Scarcity can take two forms, scarcity of product or resources and scarcity of time. Scarcity is key because people always relate scarcity to value. You’ve only got to look at how the price of something escalates when people believe it to be scarce. Take the recent pandemic as an example. The price of many items (toilet paper for example) when through the roof as people panicked, believing them to be scarce.
Time is also a scarce resource. The vast majority of deals are completed in the last few hours or minutes before a deadline (look at the football transfer deadline day and the number of deals completed in the last few hours). Scarcity taps into the fear of missing out on a valuable opportunity.
Warning.
If you constantly cry wolf — telling people you have better options when you really don’t —your ability to drive action and achieve a successful negotiation will eventually dwindle. People simply won’t buy your spiel about scarcity anymore. It’s the same reason you ignore all those emails about “one-day only” sales. You’ve heard it all before, and you know that sale will come around again soon if you just wait.
When you really do have alternatives, your behavior changes. Your responses become more neutral, and you spend less time trying to convince people about the deal.
And interestingly, just as people can pick up on desperation, they can also tell when they’re beginning to lose leverage. The sense they might be excluded from the deal—that their position isn’t as strong as they thought—is exactly what drives action.
- Breakthroughs often come when you least expect them.
Negotiating is exhausting, but paradoxically, that’s what allows the best breakthroughs to happen.
A complex deal can envelop your life, making you both mentally and physically exhausted. The constant analysis, in-person meeting, and collaboration with your team will take their toll when a negotiation is happening for weeks or months at a time.
You can only take so much. At some point, you have to step away.
And oddly enough, that’s when most of your great ideas involving the deal will come. They don’t pop into your head when you’re sitting across the table working out the terms with someone. Rather, they’re the product of internalising all the details and issues related to the deal—and then letting your subconscious work on them for you.
- You can capitalise on aggression.
If you’ve never seen an aggressive negotiator in action, your first experience can be intimidating.
Here’s the thing, not many negotiators are actually both aggressive and skilled. Most aggressive negotiators are projecting an image of what they think a tough negotiator is, and it just comes off as egotistical or irritating. Recognising that this is just a tactic to intimidate you puts you in a position to counter this. It can be hard for beginners to handle aggressive negotiators. But if you’re well-prepared and have a strong team around you, even the most combative negotiators won’t be able to best you.
Of course, the best way to increase your chances of a better negotiation outcome is to upskill yourself. You can do this as part of our Next Level Virtual Business Coaching Programme. Just click the button below to find out more..
Twelve intensive half-day meetings.
