Negotiating a business deal doesn't have to be difficult. While not everyone has years of experience in negotiation or is blessed with natural negotiation skills, every business at one point or another will be involved in negotiating, whether it be a simple business deal, a supplier's contract, or collective bargaining. Business deal negotiation is an unavoidable fact of the business world, so it's best to be educated on the topic of business deal negotiation.
Negotiating a business deal differs from other types of negotiation, often requiring a higher degree of compromise in order to satisfy both parties and ensure continued co-operation after negotiation. Imagine if, after a business' sale, the seller is retained as a consultant, but spreads innuendo to long-time clients, who represent substantial value to the business? A well-negotiated business deal must create a condition that's mutually beneficial long after the ink has dried. Here are some important guidelines to keep in mind.
OCA (Objectives, Compromises & Alternatives)
Prepare your negotiation strategy by considering OCA.
Objectives What do you aim to achieve with negotiation? Have previous negotiations in similar situations produced expected outcomes? Why or why not?
Compromises Where are you willing to give in, and what are you comfortable losing? You don't want to damage your over-all strategy, but what you consider deal-breaking issues might not even register with to the other party, and vice-versa. Compromise can help you achieve important concessions on other issues.
Alternatives What's the next step for your company if the negotiation is unsuccessful? Will this prevent your company from pursuing other business opportunities with the other party in the future, or endanger an existing business relationship?
Consider the OCA of the other party and their negotiating history; speak to previous partners or other companies who've had experience with the firm; and finally, consult attorneys or accountants before preliminary negotiations, even if they won't be present during negotiations, to ensure legality.
Bargain With Decision-Makers
If the representative you're speaking with has no decision making authority and must defer to management, you're not only wasting time, you may also be making unsustainable gains. Prior to the meeting clarify the decision-making authority of the representative and extent of that authority.
Table Important Issues First
The other party may raise smaller, red herring issues, intended to give the illusion of progress and increase co-operation. Avoid this by tabling major issues first and prioritizing, to ensure you're reminded throughout the course of the negotiations. If necessary, force an issue, or foster communication by conceding in one area to win a concession elsewhere.
Deal Squarely
Not only may providing inaccurate information result in litigation, it also damages credibility, and during negotiations credibility and trust are as good as currency. Manipulating numbers, misrepresenting status, or using unsavory tactics amounts to acting in bad faith, and even if not obvious, can taint the relationship in the future.
Be Observant, Pleasant & Patient
Gestures and parapraxes can give the other party away and expose anxiety about bargaining points. A wise negotiator draws the other party out without manipulation, noting body language and verbal tics, and uses those observations.
Remain patient with the process, never appear exasperated, limit emotions, and know that you can calmly walk away from negotiations. You also shouldn't be making a deal for the sake of making a deal. Any negotiator can sense desperation.
Patronizing the other party or being openly hostile will alienate the other party, make them less forthcoming, and create a climate unfavorable to dialogue. Open negotiations constructively, be pleasant, and remember that you are negotiating with another human being with interests to protect and responsibilities.
Grasp The Nature of Impasse Before Dismissing
Impasse is a frequent condition in negotiation, and in the case of slate-mate, ensure that you and the other party re-examine the bargaining points and positions carefully before dismissing. Small misunderstandings can grow over a period of time, and be remedied.
First negotiations are daunting, but eventually you'll find that negotiating a business deal can be profitable for your company, an enriching experience for you, and even an activity you'll grow to enjoy.
