Negotiation Skills for Small Business Owners

“Negotiation is a vital skill for small business owners, and mastering it can lead to better deals, stronger relationships, and increased success.”

My experience in healthcare is that healthcare professionals are generally terrible negotiators. We are not usually comfortable selling our product or service, and often undersell or undercut our own value. Yet, every client interaction involves negotiation: price, volume of service, time of delivery. It’s all a negotiation process. Read on to learn more.

Setting the Stage for Successful Negotiations

Negotiation is a critical skill for small business owners. Whether you’re negotiating with customers, clients, suppliers, or partners, your ability to reach mutually beneficial agreements can have a significant impact on your business’s success. Effective negotiation is not just about getting the best deal; it’s about building relationships and creating value for both parties. It’s about win-win. This post will explore key negotiation techniques and strategies that every small business owner should master.

The Importance of Negotiation Skills

Negotiation is an essential part of running a small business. Here’s why developing strong negotiation skills is crucial:

1. Maximizing Profits: Effective negotiation can help you secure better deals, reducing costs and increasing your profit margins. It can also help you know when to “hold em’ and when to fold em’” meaning…when to lean in, or politely decline.

2. Building Strong Relationships: Negotiation is not just about winning; it’s about finding a solution that works for both parties, which helps build long-term relationships. Creating a win-win is sustainable business strategy. People will return if there is value for both of you.

3. Navigating Complex Deals: In today’s business environment, deals can be complex and multifaceted. Strong negotiation skills enable you to navigate these complexities and achieve favourable outcomes. Doing so requires negotiation skills, but also that you have a very in-depth awareness of your business and what you can, and can’t offer.

Preparation: The Key to Successful Negotiation

Successful negotiation starts long before the conversations begins. Preparation is key to achieving a positive outcome. Here’s how to prepare:

1. Know Your Objectives: Clearly define what you want to achieve from the negotiation. What are your ideal outcomes? What are your non-negotiables? What is your “no thank you” point and are you prepared to stick to that?

2. Understand the Other Party: Research the other party’s needs, goals, and constraints. The more you know about them, the better you can tailor your approach. Do you know who they are using now for this contract, product or service? If so, research them too.

3. Identify Your BATNA (Best Alternative to a Negotiated Agreement): Knowing your BATNA gives you leverage in negotiations. It represents your fallback option if the negotiation doesn’t go as planned. Said differently, this is your Plan B if the deal doesn’t work, or doesn’t work out as you hoped or planned.

Effective Negotiation Techniques

Once you’re engaging in negotiation conversations, it’s time to apply your skills. Here are some techniques to help you negotiate effectively:

1. Active Listening: Pay close attention to what the other party is saying. This helps you understand their needs and find common ground. Listen to what they are not saying too. Chances are what they are saying is only part of what they are actually able to do, or are truly worried about.

2. Use Open-Ended Questions: Encourage the other party to share more information by asking open-ended questions. This can reveal valuable insights that you can use to your advantage. Be curious. Learn. If this doesn’t help you pivot in this conversation, it will help you in the next one.

3. Stay Calm and Professional: Negotiations can be stressful, but it’s important to remain calm and professional. Emotional reactions can undermine your position. Knowing your BATNA and what won’t work for you will help you to state that effectively.

The Power of Win-Win Negotiation

A win-win negotiation approach focuses on finding solutions that benefit both parties. This not only leads to better deals but also strengthens relationships. Here’s how to achieve win-win outcomes:

1. Focus on Interests, Not Positions: Instead of sticking rigidly to your position, explore the underlying interests of both parties. This opens up more possibilities for creative solutions. What do they really want or need?

2. Be Flexible: Flexibility is key to finding win-win outcomes. Be willing to explore different options and compromise where necessary. Innovate! Some Positive Intelligence (PQ) strategies to engage in creative problem solving can help you here.

3. Build Trust: Trust is the foundation of any successful negotiation. Be honest and transparent in your dealings, and aim to build trust with the other party. The Trust Edge Leadership Institute has amazing content on trust and how it is built and maintained.

Overcoming Common Negotiation Challenges

Negotiations can be challenging, and obstacles are bound to arise. Here’s how to overcome some common challenges:

1. Dealing with Difficult Negotiators: If the other party is being difficult or aggressive, remain calm and stick to your objectives. This might not be the type of client or customer you want. And that is okay. Remember that tolerating this type of behavior now, gives them permission to continue to deal with you in similar ways moving forward. Do you want your staff dealing with this person? With the culture of an organization that negotiates that way? If no, decline and move on.

2. Handling Deadlocks: If the negotiation reaches a deadlock, try to reframe the conversation or explore alternative solutions. Sometimes taking a break can also help both parties regroup. Asking for space, a pause, or to reconvene might help to remove emotion and stress from the process so everyone can return with a clear head.

3. Managing Power Imbalances: If you’re negotiating with a party that has more power, focus on the value you bring to the table. Highlight your strengths and unique offerings. Power plays may not be what you want as a service provider, think carefully about their approach and if their power will continue to impede your ability to deliver on what you are agreeing to.

Seal the Deal: Turning Negotiation into Success

Negotiation is a vital skill for small business owners, and mastering it can lead to better deals, stronger relationships, and increased success. By preparing thoroughly, applying effective negotiation techniques, and striving for win-win outcomes, you can navigate the complexities of negotiation with confidence. Remember, negotiation is not just about winning; it’s about finding a solution that works for everyone involved. Also, importantly, never count your chickens before they hatch! The interesting thing about negotiation is that nothing is every truly done until you have a signed or legally binding way to hold the other party accountable to what you have agreed to. I have made the mistake many times of taking people at their word to find out it has no value. Get things in writing, or follow-up with a written trail to make sure that you only move forward when it is safe to do so.

Interested in learning more or in working together to make this happen for you? Reach out.

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Adapted from “Module 4, Sales” by FocalPoint Coaching and Training Excellence, Copyright 2018, by Brian Tracy and Campbell Fraser. Reprinted with permission.