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Entrepreneurs know that understanding common negotiation tactics is good business. Having a good understanding of the strategies that can be used by you or on you is necessary to becoming a skilled negotiator.
Negotiation is usually a part of any deal or transaction and it must be a strong part of your game. In this article we present some ideas that will give you an opportunity to look at negotiation in an entirely new way and will give you a better basis for playing the negotiation game. It will help you work on your business psychology and to become a more skilled entrepreneur and negotiator.
Everything’s negotiable
The first rule to negotiation is, always, “everything’s negotiable”. There are many negotiating strategies and tactics, but if you don’t get rule number one, those strategies won’t apply because you will not be doing much, if any, negotiating. You must believe that everything is negotiable. For example, I recently asked my phone company to throw in a couple of free months phone service because I had been a customer for a number of years. They said yes. I also recently asked blockbuster online to give me a couple of free months membership because we weren’t renting enough movies to justify keeping an account. They complied. In both cases, had I not asked, I would not have received the bonus months.
Be willing to walk from the deal
The second rule to negotiation is you must be willing to walk from the deal, and the other party must believe it. That means you need to believe it. If you’re buying a new house, for example, and you’ve completely fallen in love with it, you absolutely must have it, negotiations will not be as successful. If you must have the house or property, use a “partner” as the one who could do without. In this instance you could say, “I doubt my partner will agree to that. He doesn’t really want this particular house that bad. I’ll ask him.” In either case, the other party must know, without a doubt, that you are willing to walk from the deal with zero regrets.
Once you have these two rules down, it is pretty much smooth sailing from here. But, you’ve got to believe rule #1 and rule #2. This is non-negotiable (in spite of rule #1).
Be able to set aside a single issue as you work towards an agreement
Use your people skills, no need to be pushy. Negotiations can and should be about people. Take your time. Find out what motivates the other party through conversation, questions and listening. Ask yourself, “What does each party need to accomplish?” This will give you an opportunity to navigate towards a solution where each party realizes their desired goal (ideally). You might say, “Let’s sit down and talk and see if we can come to a mutually beneficial agreement.”
This is an important strategy to fully understand. Let’s say from our example above, that the seller of the house you looked at had already told you he would accept nothing less than a full price offer. Rather than let this kill the deal, your goal will be to say, “Let’s put that aside and see if we can agree on everything else.” There are still many scenarios where the seller could get his full price but not in the way he might be seeing right now. For example, you could end up negotiating a seller credit for repairs, or the seller could carry back a small second. In both cases, he could still get the full asking price, or close to it, but the actual dollar amounts would be categorized at closing as something other than the purchase price.
You’ll have to do better than that
This is a simple and effective strategy. When the offer is made, you simply reply, “You’ll have to do better than that.” This is particularly effective when the other party clearly realizes that you are not desperate to get the deal done and are, in fact, willing to walk. The key here is to make your statement and then stop talking! Give the other party an opportunity to negotiate against themselves and make a better offer.
The High Low Game
There are many negotiation strategies. Some, such as the High Low game, are old and frankly, unnecessarily confrontational. You start low, the other party starts high, and hopefully, you meet somewhere in the middle. This is generally not an effective strategy.
