So you might be negotiating a new lease on your office space, negotiating prices for a manufacturing contract, negotiating the terms of an employment contract for a new employee or negotiating a long term contract for marketing support.
Whatever it is, here are 5 tricks about negotiating that only savvy business owners know about that can improve your negotiation position immeasurably.
- Read, understand, ask questions and negotiate a win-win
I am constantly amazed at the number of business owners who do not even read the agreement they are signing. And for those who actually read it, a high percentage won't understand what everything means. And a lot of times, business owners won't ask for an explanation because they don't want to seem to be stupid or to be rocking the boat. Even when it is their own contract, very often they won't understand all of the terms.
Savvy business owners will understand every term of the contract and will not be afraid to negotiate hard to get the best deal for them – but not at the expense of the ongoing business relationship. Savvy business owners know that a win-win negotiation is the best outcome. If you screw your supplier, landlord, employee etc at the start of the negotiations and the relationship, that person will not be incentivized to provide you with a great service agreement.
- Use silence effectively
When you are in face to face or telephone negotiations, savvy business owners know that silence is powerful. Don't be too eager to rush in and fill the gaps. Ask a direct question like ‘is that the best price you can offer' and then wait for the answer. Use the mute button on your phone if need be (though don't forget to unmute when necessary or that could lead to a few problems…)
- Research, research, research
Savvy business owners know that knowledge is king and will significantly strengthen their negotiating position. Negotiating with your landlord – savvy business owners would have all the facts to hand about the market value of rentals of similar properties in the area. Negotiating with a new employee – savvy business owners will have benchmarked comparable salaries and benefits and will have these figures to hand.
Savvy business owners will also have researched the people they are dealing with – both the corporation and the individual to find any information they can use to their advantage. So for example, they will have found out when the quarter end is so that they can speak to the salesman at the time when he is incentivized to offer better prices to hit his sales targets.
- Know your deal breakers
Savvy business owners will go into any negotiation knowing their best case scenario and what they want to achieve but also most importantly their deal breakers; the point at which the deal just doesn't work for them and at which point they will walk away.
If a supplier is offering you a discounted price per unit but there is a lengthy tie in and minimum purchase requirement, savvy business owners will know at what point the risk/benefit analysis tips to that being a deal that is too risky to do and will walk away.
If an employee looks great on paper but won't budge on the hours they will do and that doesn't work for your business requirements, then the savvy business owner will walk away from that deal and find the right person who can do the required hours.
Less savvy business owners will get tied up in the ego of negotiating or the process itself and will not have the balls to walk away from the deal and will think ‘I can't be seen to back out of this' or ‘I can't be bothered trying to find someone else – it's not ideal but I can put up with it'.
- Only negotiate with those who have authority
Savvy business owners will only negotiate with people who have authority to do the deal.
A lot of businesses will send a person who is not authorised to agree a deal so that they can reserve their position as a negotiating tactic.
Savvy business owners won't waste their time with a second in command and will ask the question upfront – are you authorised to agree these terms. If it turns out that the person they are talking to isn't authorised, the savvy business owner will respectfully ask to reconvene when the decision maker is present.
I hope those tips serve you well. Tell me, are you a savvy business owner and have you already used these strategies for great effect in your negotiating? or are you on the path to being a savvy business owner and is trying to learn and implement great business strategies like this? – Comment below!
If you found this helpful please feel free to share on social media or otherwise with an upfront credit to me Suzanne Dibble as the author.
If you want to see more negotiating tips (and an awful lot more) that will help you become a more savvy business owner, check out my ONLINE MEMBERSHIP SITE – if you use the code SUMMER50 by 30 April 2015, you can become a member for 50% of the usual price.
© Suzanne Dibble 2015
Disclaimer: The information contained above is based on English law only and is provided for information purposes only. The contents of this article are not intended to amount to advice and you should not rely on any of the contents of this article. Professional advice should be obtained before taking or refraining from taking any action as a result of the above contents. Suzanne disclaims all liability and responsibility arising from any reliance placed on any of the contents of this article.