You will need always to negotiate if you want to win a sale with better conditions or make purchases of raw materials with better conditions. Notice that in both cases we say the word better that is the goal of negotiations process.
In order to have negotiation as a process we will must have:
- minimum of two sides involved in negotiation process,
- a subject for negotiation between both sides and
- existence of different purposes between the two sides.
Who is at another side in the negotiation process?
Entrepreneurs must negotiate with suppliers, potential customers and employees. I say must because the entrepreneurs are not always aware of the fact that they must negotiate. This means that in many situations, they do not use the power of negotiation to ensure better conditions for their own business. For example, in many cases they are not exploiting the possibility to negotiate with suppliers to ensure lower prices, provide a better payment period or better business relations…
As a last requirement to be able to negotiate is to have different goals between the two parties. For example, consider the 3 most common entities with which an entrepreneur can negotiate:
- Suppliers. Entrepreneur wants to achieve a lower purchase price, while the supplier wants to achieve a higher price.
- Buyers. Entrepreneur wants to achieve a higher price, while the buyer wants to achieve a lower cost.
- Employees. Entrepreneur wants to pay based on performance, while employees want to have higher salary.
These are simple examples of different goals. However, in the reality the goals are much more complex, and they are affected with many more factors depending on the conditions and types of negotiations.
Who’s the winner?
What is often wrongly understood in negotiation is that people participants in the process should be winners or losers. You can note that as a condition for the existence of negotiating, I don’t place that one side should win and the second to lose. Negotiation must satisfy both parties participating in negotiations, and that means providing a compromise.
Simple said a compromise is sacrificing something that one side wants so that the final agreement can be reached that is acceptable to both sides.
Negotiation process is not a battle between two sides in which one is always the enemy of the other. Do you see your potential customers in the negotiation process as an enemy? Surely, the answer is no. More positive approach is when the parties see each other as future partners. This will ensure a greater likelihood of reaching a final agreement.
Possible results from the negotiation process
I would like to end this first part of the post bargaining (bargaining councils follow) a little to enter and the possible outcomes of the process. The process of negotiation can lead to the following results:
- Agreement between the parties,
- Failure of agreement between the parties and
- Delays in negotiating and reaching agreement.
The first result is the one that is desired. Second, although not desirable it is still possible and better because participating parties can not afford to cross the limits set to ensure general agreement acceptable to both sides.
The third result is the result that must be unwanted. It can have bad consequences and something that will decrease your overall productivity. The delay can be:
- On certain time for which you must insist or
- Indefinite period of time that should be avoided.
Always look for the response in a shorter period of time such as one week, even if that response is a negative response. The biggest cause for indefinite delaying of negotiations and agreement is one possible answer from one participant in a form a MAYBE. This answer sounds encouraging and can give you a hope that the negotiations are not unsuccessful and in the future will continue to reach an agreement. However, it sometimes maybe can be simple cultural rejection to an agreement. This way, you enter in a cycle of pointless spending time and energy to someone who is not able or not willing to make a deal.
So, always look for an answer, even if the result is no.
10 Tips for the negotiation process
First we need to start with preparation for negotiation before the start of a negotiation process. If you are better prepared, the chances for success of the negotiations will be larger.
- Set clear negotiation goals. What want to achieve through negotiation? Is it better price? Is it larger quantity sales? Write down all the goals that will need to be achieved in the negotiation process. The goals will help you to determine any further elements of the process.
- Specify the limits. There must be limits to where you can go, and beyond them, you could not accept anything.
- Study the other side with which you will negotiate. Try to come to as much as more informations about the other side. Find out their strengths and weaknesses. Prepare the appropriate response to the strengths and try to score on their weak side. Take a special attention about whether the person with which you will negotiate has the power to decide. If not, try not to enter in the process until on the other side does not sit someone with deciding power.
- Put yourself in the position of the other side. What other sides expect from the negotiation? What are their limits? In such a way try to enter the brain of the other side and simply view things from a different angle. In such a situation try to find some items that may be too important for that side, and in the same time they are not so important for you. In such a way, you can take the first steps toward the compromise.
- Make sure that in the proposed version of the offer is covered everything that you want. Prepare the proposed version of the offer which will be subject to negotiation. It is the basis on which will be asked different questions and will be given different answers. If you don’t ask for something you will not get it. Make sure that everything that you want to be the part of the proposed version of the offer is in the offer, then negotiate.
- Make sure that the original version of the offer is not too much radical. Although previous advice is to cover everything you want, but be careful not excessive because exaggeration can lead to failure of the negotiations.
- Show willingness to negotiate. Unconditional submission of tender for acceptance is not a negotiation. Although your goal is to be accepted the proposed offer, in many situations this is impossible. So show the other side that you are willing to negotiate and find a compromise for a mutually acceptable solution.
- Listen carefully. I know you have too much for telling. However, the other side also has something to talk about. While other side talks carefully follow, do not wait just a pause to start with your speaking. Record what is important to other sides talking. In such a way, you will increase your knowledge for them. The best negotiators are the best listeners.
- Ask for the opinion on key elements of the offer. Always insist the other side to give you an opinion on the key elements of the offer. This way you get to desired information on possible elements around which negotiations will take a place. This may encourage the other side to say something that you can use in your favor.
- Follow and assess. Carefully follow the behavior of the other side when you talk. This may be related to body movement, reactions, eye contact … This is valuable information that can help you in creating the right opinion about the opposite side.