Entrepreneurship is the heart of every industry. Every entrepreneur wants to win no matter the challenges of their business.
In a study conducted by Artinger, Vulkan and Shem-Tov (2015) published in Small Business Economics, it was found that that entrepreneurs make extensive use of emotions and arguments as means of persuasion and close fewer deals.
However, when they do close a deal, they make more profits. So how does the entrepreneur find that sweet spot?
Negotiations are a delicate balance of give and take. Learning to strike this balance is necessary for any entrepreneur hoping to build a flourishing business.
What separates successful negotiators from unsuccessful ones?
Successful negotiators, just like entrepreneurs, make an effort to learn and develop skills that will benefit their business and make them stand apart from the competition.
It takes time and practice to master negotiation skills as every deal will be different and can be a success by applying the right approach backed with credible research.
Here are few things that entrepreneurs and new business owners can keep in mind while negotiating a deal.
Research & Preparation.
You have probably already heard that 80% of negotiation success comes from preparation, still, it is difficult to find the time for preparation.
Start with a simple negotiation preparation template, this will get you into the habit of using preparation on a regular basis.
Pay special attention to look at the deal from both sides (my interests and their interests, my arguments and their arguments).
To prepare well, you also need to conduct comprehensive research on your counterpart.
Start with the individual you will be dealing with (LinkedIn is a strong starting point), you can use one of the tools to discover their personality based on an AI-algorithm (www.humantic.ai or www.crystalknows.com).
Then, move to some in-depth research about the company, the industry, the market.
Especially if you are in the service business, be aware that customers are not buying your firm’s credentials or reputation. They buy at an emotional level: “I like this guy”, “I had a good feeling about them”.
Being a person of integrity is a solid foundation to build this positive impression.
A logical consequence of the previous step is your ability to build relationships. It starts with making good first impressions, then the ability to build rapport and last, creating a foundation to build trust.
Questioning & Listening.
In negotiation, the one who asks the questions is the one who leads the negotiation. For years, we have seen negotiation like a battle of arguments.
Questions are more effective than arguments in negotiation. As Blaise Pascal already said in the XVII century: “People are generally better persuaded by the reasons which they have themselves discovered than by those which have come into the mind of others.”
Good questions will not take you far if they are not combined with active listening. Make sure you sharpen your listening skills so that you can apply the advice from Stephen Covey “Seek first to understand, then to be understood”
Ability to Create Value.
If you want to enjoy repeat business with your customer, you should learn to achieve your goals while retaining the relationship. From time to time, you can use some competitive techniques to claim more value for yourself.
On the other side, what will make you win in the long term is to be able to create value with your counterpart. For instance, identify creative ways to solve a problem rather than just fighting on who is right.
Another powerful tool to create value is to make trades. Identify a topic that it is very important for one party and less for the other, then vice versa for another topic.
You are then in a position to suggest an effective trade using the sentence “If you… then I…”, for instance, “If you give me a two-year contract, I can reduce my price by 5%”
Your negotiation skills have a big impact on your bottom line and on the quality of the relationships that you will build with customers and suppliers. Make sure to invest time and effort to strengthen them.