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October 24, 2011

10 Steps to Negotiating the Best Business Deal for You – A SPN Exclusive Article

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Today in business you don’t get what you request– you get what you bargain for. You see, everybody asks “What’s in it for me?” So for you to get what you want, you’d better expect to answer that doubt for the people you collaborate with by learning negotiation know-how.

I have had plenty of success in negotiating opportunities lately, specifically since I am not known as an expert negotiator. I have negotiated raises that were 5 times what was proposed, negotiated an executive level position worth thousands beyond the job description with triple the job security, and negotiated online services worth hundreds of thousands of estimated income for my company. How did an amateur like me accomplish these things and learn how to negotiate in business? Here are 10 steps that I use for effective business negotiation:

Know What You Want … and What They Need

How simple this sounds, but how difficult to realize. You need to know specifically what it is you want from the transaction or negotiation. Don’t wait for the other party to state their point of view to decide what yours is going to be. If you want a raise, how much? A commission for click-thru sales, what percentage? Write these things down as a wish list of all the items you do want before you begin negotiations. If not you may think back and find you were persuaded into agreeing to terms for things you didn’t need to begin with. In order to counter effectively and find how your value proposition matches the other party’s needs, you first need to know what those needs are. Again, be very specific in terms of dollars, percentages, times, etc. Experienced negotiators will take their specifics and read between the lines to find needs not stated, emotional issues like political victories within the organization.

Exercise Patience

Lack of patience on your part can make you appear an amateur and ruin a deal. Ed Brodow, writer of “Negotiate with Confidence”, says that your patience can be devastating to the other person if they are in a hurry. The opposite is true for you. Conceal self-imposed deadlines that reveal to your adversary that you might be subject to a timetable. “Never accept the first offer”, says Brodow. “They will be more satisfied if you reject the first offer– because when you eventually say “yes,” they will conclude that they have pushed you to your max.

Know Your Walk-Away Moment

One of the biggest issues with auctions for the purchasers is that people get whipped into an enthusiastic craze during the process and bid, and ultimately purchase, something at a much higher price than they would have ever considered possible. They neglect to know their ceiling bid. This can happen in negotiation too. You must know your fallback position or cut-and-run point. What’s the bottom line amount you will take?

What Battle Is Worth Fighting?

In any settlement you will need to compromise if for no other reason than to allow the other party to feel they have gotten something out of the deal. Decide early what are the key compromises you will not make– what’s really important to you. Don’t die on a hill that isn’t worth dying on, folks. If you ‘re being offered a position as an executive in a company, is the monthly car lease an important enough point to be a deal killer?

Match Benefits to Their Needs

For you to expect anyone to give you something, you know you have to provide quality benefits to him, whether in a verbal negotiation or a written pitch. Now you know what he needs, so review your list of attributes for yourself or your company, and look for matches to the needs of your negotiating opponent. Professional negotiators will find unfulfilled wants that the other party has that weren’t stated and point out how cutting a deal will satisfy them. For example, I recently negotiated a deal on behalf of an online business portal with a national data provider. The data provider permitted us to upload data that is normally purchased on a subscription basis for access to the predicted web traffic on the portal. This traffic means click-thru sales, which we even negotiated a commission on!

Pursue Win-Win Deals

This is an attitude that has to occur for you to be profitable today. There are no more winners and losers in discovering consultative sales or negotiations. There has to be winners on both sides of the table, so find gaps that you can fill and look how the other guys can fill your gaps. The truth is that every company and every person is different with different needs and wants. Use that to your benefit. Something that has little cost to you in concession may be a major coup for the people you ‘re doing business with. Let them have it, because the reciprocal situation applies for you. Free software is an example. Software costs little to reproduce, so therefore the marginal costs to a software company are miniscule, but the value of a package may be tremendous to the right party. Everybody profits if all sides keep the needs of their opponent in mind instead of thinking about defeating them. Opportunities will surface that you never imagined possible.

Find Workable Compromise

This goes back to a prior point. Certain things you cannot live without, but others are manageable. Know early where you can be flexible and just how flexible you can be (Gumby or Plasticman?). Any time you give in on a point in one area, including terms of payment, it is perfectly appropriate and expected that the other party will yield somewhere else. As long as you keep from flinching on your critical negotiation goals, you can find compromises that permit both sides to come together in the middle without losing face.

Don’t Underestimate Your Worth

This is a basic sales mantra that I live by, and it occurs daily when people concede on price or terms without narrowing the scope of service or demanding comparable concessions. If you are willing to take a hit to your bottom line in exchange for zero, your authority goes down, now and in the future. If you do it once it becomes precedent setting. Moreover, it leads to mistrust, because you just proved you did not give your best deal from the outset. You’ve set yourself up for the proverbial spitting for distance contest, subjecting your side to future browbeating for unjustified concessions. Any time you surrender anything in a negotiation, make sure that you show value becomes a little less from your side or demand additional value from their side.

Stick to Your Guns

If you offer a good proposal and you know it, stick to it! Don’t let fear, condescension from your counterparts, or chiding language make you back off from your position. Let her vent, telling you how preposterous your argument is while proving nothing, and then re-emphasize how she wins by doing business with you. Put the ball in her court by asking her to demonstrate there is no value in your offer. It’s easy to throw stones. It’s much more difficult to prove those airborne stones were deserving of flight. Don’t back down and you won’t fail the final test of the negotiation.

If you cannot achieve satisfaction, follow negotiation expert Brodow’s Law: “Always be willing to walk away.” Other deals are just over the horizon, so don’t get too vested in this one.

Document the Deal ASAP

You’ve got what you want and so does the other side. “Look honey, it’s a win-win situation.” Great! Get it written down before you pat yourself on the back and get it to the other party for sign-off. Why? To begin with, tomorrow his memory may recall something in a different way. Second, many times negotiators occur between the leaders of organizations or people who guide the operation but have no legal background. As soon as the lawyers and analysts get hold of the agreement, you can bet that items will be questioned today that were a done deal yesterday. Oh yeah, it’s true.

The next time you’re in a situation where there is give and take, remember that a negotiation is going on, whether you call it that or not. Apply these ten little rules to your situation and watch with marvel as you get that pay increase, secure that new position, make that next sales commission, or get that great deal. Then go out to your favorite restaurant and reward yourself with a hot meal for getting what you wanted– on you. You deserve it.


Karl Walinskas is the CEO of Smart Company Growth, a business development and cost management consulting firm for small to mid-size enterprises, and Virtual Mastermind, an online network of Mastermind Groups for small business owners. He has made a career of leading, inspiring and raising the game of small business people. He is the author of numerous articles and the Smart Blog on leadership, business communication, sales & service, public speaking and virtual business and Getting Connected Through Exceptional Leadership, available in the Smart Shop, Amazon.com, or Barnes&Noble.com. He can be reached at kwalinskas@smartcompanygrowth.com.

One Response to “10 Steps to Negotiating the Best Business Deal for You – A SPN Exclusive Article

    avatar JippityJack says:

    Knowing when to walk away from the deal is very important for both maintaining value and integrity. If you are confident in your product or services then you should remember this when negotiating.

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