Negotiation is a process where two or more parties with different needs and goals discuss their issue to find a mutually acceptable solution. Negotiation skills are indispensable, whether you need to oversee either formal or informal business operations. For a startup owner negotiations are important because they help in:
- Negotiating conditions of sale
- Settling on a lease
- Getting a service providers
- Signing legal contracts
- Getting new customers
Startup owners enter into business associations for a multitude of reasons, but the nature of the goal determines what kind of negotiation will take place. There are two types of negotiations.
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Distributive negotiations occur when two parties with opposing goals compete over a set value. This ultimately translates to one team losing the deal to their counterpart.
Otherwise known as a win-lose situation, participants of distributive negotiations normally focus on the individual and are based on a short-term interaction.
Interactive negotiation involves cooperation between the two groups to integrate interest, create value, and invest in the agreement. This is commonly referred to as a win-win scenario as the two parties involved are interested in multiplying the benefits. The relationship in this instance tends to be more long-term.
All negotiations cannot be an interactive negotiation but for start-up owners, it is good practice to have more of this. Long-term relations are needed for the growth of a business.
Preparing For the Negotiation
Prior preparation is crucial before any negotiation occurs. But how do you ensure that you are ready for the encounter? Below are some of the ways startup owners can prepare for negotiation;
Define Your Goals and Walk Away Point
The goals need to be clear. A business owner should know what the aim of the negotiation is. Going into the negotiation table the business values and non-negotiables should be at the forefront.
Defining the objective in advance helps prevent last-minute rush that might have regrettable results later. In addition, understanding that the other party might have opposing values will help you anticipate it and work out a contingency plan.
Research the Other Party and Their Needs
There is a need to know the people on the other side. This section is characterized as a feeling-out period, by getting to know and understand their dos and don’ts.
Values might not match, and your terms might hit a wall but if you know the needs of your counterpart you can pivot and still seal a deal. Within the research get to identify contenders’ attributes and how to use the findings to gain an upper hand.
Gather Supporting Data and Evidence
Supporting data is any information that is not part of the negotiation but if used strategically can be effective. Factors to consider can include;
- Current events
- The other party’s beliefs and habits
- The location, region, or country
- Time of the year
The truth is that negotiations are unpredictable but having vast knowledge of the situation at hand, adaptability, and flexibility will help in throwing the right cards.
Develop a Negotiation Strategy
Negotiation strategies are the persuasion tactics that an individual needs to put in play for them to come up on top. Key factors need to be considered when coming up with a strategy;
- Desired outcome
- Assessment of the other party
- Goals and objective
- Relationship between the two parties
- Prior interactions and their outcomes
Here is a quick rundown of tips for negotiating effectively;
Be Assertive But Respectful
Assertiveness is about expressing your points clearly and confidently. Communication is the main tool for the success of a negotiation. Assertiveness presents the opportunity to negotiate from a point of strength, helping to avoid settling for what is far from the ideal outcome.
In addition, a respectful approach to assertiveness should be felt in the communication. A respectful negotiation environment fosters mutual gains that might include improved relationships and fairness.
Listen Actively and Ask Questions
To get a result that is favorable for both parties it is good to actively listen to what the other party wants. By listening you get clues on what they value and their priorities. Working out the information obtained with your principles helps birth a win-win scenario.
In some cases, the party might not talk much, which is where questions come in handy. By asking questions, they are coaxed into sharing information that would have been lost and soured the negotiation.
Be Creative and Flexible
The outcome might be set in mind but there is a need for a slight wiggle room. Before the negotiation, a path of least resistance might have been the best theoretical scenario. No matter the planning there will always be twists and turns in the negotiation process. If both parties have fixed mindsets for getting to their own goals, it will be hard to get a deal that works for both.
Use Silence to Your Advantage
Silence can play a key role in negotiation when it is paired with confidence and the belief in certainty. The inner belief that what you are bringing to the table is worth it, words can fail to compare. Furthermore, silence can be used as a tool to actively listen. By using body language instead of a lot of words it can show interest in what the other person is saying. This builds a good rapport.
Be Willing to Walk Away
No matter what the negotiation is, a business owner should know the ideal outcome and the minimum requirement. Walking away should not be viewed as a haggling tactic but it is a way of safeguarding your principles, values, and goals. Some deals might have terms that fail to pair with your goal. Let your objectives and non-negotiables guide you on when to walk away.
Closing the Deal
Finally, the negotiation has reached its crescendo and both parties have arrived at a consensus. An ideal outcome has been reached. Each party is ready to start implementation but before that, business owners need to remember the following;
- Summarize the Key Terms of the Agreement
- Get Everything in Writing
This helps guard the expectations of the agreement which will help build a positive relationship between the two.
Business owners will normally spend more of their working hours meeting different people and handling various types of negotiations. These negotiations, if handled correctly, contribute significantly to business success because they help companies, especially startups build better relationships, deliver lasting quality solutions, avoid misunderstandings, and boost sales. By having proper negotiation skills, entrepreneurs can build their businesses while strengthening ties with other stakeholders.