Negotiation 101: The 6 Basic Principles of Negotiation

To be a highly effective negotiator, you need to focus more on the other party than on yourself.

This article is for you if you:

• Don’t have a clear structure in place to be successful in negotiating
• Are looking for fresh strategies to be more successful in negotiating
• Want to know what the common negotiation mistakes are
• Are having a difficult time handle objections
• Don’t know what to focus on during the negotiation
• Want to win virtually every business negotiation

Every business owner will spend the majority of his/her career negotiating, whether it be with their customers or with their employees. Being able to negotiate is key to acquiring and retaining profit in any business.One of the biggest mistakes I’ve made as a negotiator is telling the other party what to think. It is critical when negotiating that you ask relevant questions and listen. You need to focus more on the other side than yourself.

Here are six basics of negotiation:

1. Be Prepared

• Know about the party you will be negotiating with
• Take advantage of your strengths and of their weaknesses
• If possible, speak with other business people who have negotiated with the other party in the past / do your research
• Many negotiators have their patterns and styles that you may be able to use against them.
• Most importantly, before you begin the negotiation, make sure that the other party has the authority to make binding commitments; you don’t want to find yourself in a situation where to believe you’ve closed the deal only to find out that your agreement has to be approved by someone higher up the ladder.

2. Have a Strategy

• The first offer is usually always the most important offer as it becomes the benchmark by which the following offers will be judged or compared.
• You will never get what you do not ask for; make your first offer aggressive.
• Have something to give away without hurting your negotiating position
• Consider adding decoys for the other party to findInclude nice-to-have items that are not critical to the success of the project.
• Spare parts that may or may not be required in the end
• If your customer decides to take those items out to reduce the overall cost, you haven’t lost anything, and you have helped your buyer reach their target budget.
• Watch for clues like body language and speech patterns
• Be prepared to stop or cancel negotiations if the other party seems stuck with their position.
• Be clear with your unwillingness to continue under their conditions and make them wonder if you will be back.If they are on the hook to cut a deal, they will feel pressured to agree to your terms.

3. Know when to Stop Talking

• Many smart negotiators make this mistake. They just don’t know when to stop talking even after the other party said “Yes.”
• This happens when you are trying to prove a point. This is not "negotiation."
• Great negotiating is more listening than talking
• Once you have said something, you cannot take it back – choose your words carefully

4. Mind your manners / Be Respectful

• When the other party objects, don’t become defensive
• When the other part objects, ask for clarification
• Ask for specifics
• Use objections as an opportunity to listen carefully
• NEVER Interrupt
• Trying to win an argument will never get you what you want

5. Find the Influence

• Concentrate on taking maximum advantage of your strength
• If you are the sole source of a product, you have tremendous leverage across the board.
• If economic circumstances created a market that your product is in great demand and low supply, you have more bargaining power to name your price.
• Establish a strong foundation early on in the negotiation by demonstrating your skills on the matter.
• Playing “catch-up” during a negotiation can be very difficult

6. Your Offer and Closing the Deal

• An offer is not just a dollar amount.
• Includes all the elements of the bargain and the formal agreement or contract.
• Make sure you nail down all the specifics in your offer
• Your offer should include but is not limited to the following:The Price
• Scope of work
• Identification of services and or products (if any)
• Warranties (if any)
• Terms and conditions
• All documents incorporated by reference
• Your primary focus is on price; it is critical keep all the other components of the deal in the forefront of your mind.
• Offers should be presented in writing and must include all the elements of the bargain.
• Successful negotiating requires a sense of timing, resourcefulness, keen awareness and the ability to anticipate the other party’s next move.
• Negotiation should be designed to set up not only your next move but your subsequent moves down the process.
• Always have the endgame in mind as your plan your strategy.
• All offers leading up to the final number are important: they will set the stage for final handshake.

Take these strategies and plan your negotiations carefully. This will help you win more negotiations and help you become more successful in your business.

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