Negotiation is two or more parties working towards a mutually agreed upon solution to a shared issue. Negotiation skills can help you make deals, solve problems, manage conflicts, and build relationships. Some people are naturally skilled negotiators, but negotiation skills can also be learned.
Negotiation is an important part of running a business so learning the skills necessary to successfully negotiate will really pay off. Most things in the business world are negotiable, as long as you know the right way to ask. Here’s what you need to know to become a better negotiator:
Almost Everything is Negotiable
When you’re the head of your own company, you make hundreds of business decisions every day – some small, some large. Know that many of these decisions – from hiring, to inventory, to banking – are negotiable. Setting up the best possible deal in the beginning can save you money, time, and stress down the road.
Before you enter into any contract, whether it’s a bank account, a new lease, or a hiring agreement, take the time to educate yourself on what the potential terms of the negotiation are. For example, say you’re planning to take out a loan. Common loan terms include the amount, the interest rate, the term, and provisions for what happens if you pay early or late. All of those terms are negotiable.
This kind of research may take a bit of time, but it’s worth the delay. Even when a matter is time-sensitive, don’t feel pressed to make a snap decision. Know your options so you know what to ask for.
The First Five Minutes Of A Negotiation Are Key
The initial five minutes are so vital because the other party is scrutinizing you closely in order to size up their adversary. During the opening moments, the other party makes judgments about your credibility, honesty, and willingness to negotiate.
Knowing how to set the tone in those first few minutes can lead to a more favorable outcome. Aim for empathy and practice active listening to forge an instant connection with the other party. If they like you, you’ll have their ear and attention. Go in confident, friendly, and open – there’s a reason they say you should “never let them see you sweat.” Walk in like you know what you’re doing and they’ll be naturally inclined to believe that you do.
Set The Right Negotiation Tone
Use your initial introduction to establish rapport with the other party. If you strive for likability, they will be more likely to concede during the course of the negotiation.
Psychologists recommend vocal and speech mirroring to show the other person that you’re similar to them. If they cross their arms, you should too. If they lean on their chair, do the same. If they ask a question, respond with another question. These patterns demonstrate that you share the same playing field, and signal through body language that you’re likable and trustworthy.
However, you should avoid mirroring the other party’s negative signals. If the other person frowns, curses, rolls their eyes, or otherwise engages in any other outward displays of frustration, mirroring those signals will give the wrong impression. Mirroring is supposed to make them feel at ease, not put off, so be sure to mirror only positive signals to secure the best outcome.
This technique takes some practice – you want to mirror subtly so that you don’t seem awkward or too obvious.
Make The First Offer
It can be tempting to let the other party make the first offer so that you know where they stand, but this may not always be the best tactic. Some business experts state that those who make the opening offer at the outset control the rest of negotiation.
Social scientists refer to this as the anchoring principle, where people give significant weight to the first piece of information they have, whether that weight is reasonable or not. There’s some evidence that people ruminate on the first number they see, hence the “anchor” fixes the negotiations at one static point. For example, if you’re asking for a raise, you might consider asking your boss for slightly more than you actually plan on getting. That way, the number is higher in your boss’s mind from the start, and you’ll be negotiating from there.
Putting the first offer on the table also shows that you are confident, which is a boon to any business setting. So, don’t be afraid to make the first move! Knowing the anchoring principle can help you open strong and get the numbers you want.
Don’t Be Too Aggressive
Making the first offer can help you, but only if you do it the right way. Don’t start with a ludicrous proposal like doubling your salary or cutting the interest rate on a loan in half; then you run the risk of offending the other party or making them think the negotiation has no chance of going anywhere.
Instead of making extreme demands, aim for a flexible offer that is within the realm of possibility for both parties. If you both have room for concessions, there’s a greater possibility of coming to a mutual agreement. Remember, negotiations go both ways – so don’t be afraid to give a little to come to the best possible resolution.
Never Accept The First Offer
Perhaps you didn’t get the chance to make the first offer. That’s OK. All is not lost. If the other party makes the first offer, simply use the tactics we’ve already discussed to make a strong counteroffer.
Some experts say that it’s important to make an aggressive counteroffer to reset the control to your side. In any case, know that the first offer (from either party) is simply a jumping off point for the negotiations so don’t get discouraged if you’re forced to counter.
Create A Sense Of Urgency
One of the most time-tested tricks in any business deal is to create a sense of urgency for the other party. The more you make it seem as though your offer will only stand for a short amount of time, the more appealing it will seem to others. You don’t want to make a snap decision because you don’t have time to think through all of the options and implications. However, you can improve your position by making the other party think they need to move quickly.
Try to convince the other party that they have to act promptly or the deal will be off the table. Use language that signals a finite endpoint for your offer so they know they need to act quickly or risk losing out. The imaginary ticking clock can help move negotiations to a close.
Show Them The Money (Or The Data)
Knowledge is power. This is true in life, and this is true in business negotiations.
In negotiations, quantity beats quality. If you want to influence the other party, use large amounts of data in your favor. Show them the hard numbers, back up your talking points, and reference exactly where your facts are coming from. If you can show your caserather than just talk about it, you’ll make your argument that much more compelling. When the facts back up your arguments, it automatically makes you credible and trustworthy.
According to Columbia Business School professor Gita Johar, when you “provide a lot of information, some of it is bound to stick.” The other party will subconsciously weigh the data, thus making them open to persuasion based on fact, rather than emotion. This also makes it clear that you’re prepared and you know what you’re talking about.
Negotiations can bring out your competitive side and might even raise your blood pressure. This is normal, but you must be careful not to lose your cool. Raising your voice or using profane language is never acceptable in a professional business setting.
If you find yourself becoming hot under the collar, don’t blow. Simply request a break to use the restroom or grab a glass of water. Indulge in a few deep breaths and reset so you can continue negotiations calmly and rationally. Always show respect for your business associates, even when you’re locking horns.
Just Say “No”
A simple “no” can be a powerful asset at the negotiation table. If you can’t provide something the other party wants, say so. Likewise, if what they’re offering is not working for you, the word “no” works both ways.
If you get a “no” in one area, that doesn’t mean that there isn’t a “yes” around the corner in another! If you hear “no” to one part of the contract, move on to the next section where they may be more wiggle room. It’s ok to leave an issue for a while and circle back; you may find something later in the negotiation that gives you leverage to get what you want.
Don’t Be Afraid To Walk Away
Sometimes your negotiations are simply not going to go the way you wanted. It happens; that’s the nature of business. Sometimes you need to leverage your power to walk away from the ongoing negotiations and call it a day.
This doesn’t mean the deal is off the table forever. It just means it’s not going to happen at this very moment. It’s possible to use the “walk away” tactic to open negotiations with the same party at a later date. Being willing to shut it down if it’s not working in your favor demonstrates that you mean business.
The Bottom Line
Learning simple negotiation skills will serve you well in the business world. Knowing the right techniques can help you close the deal in your favor. With our tips, you’re on your way to hearing that magic word: “Yes!“