Small business owners face numerous challenges, and most of them need to wear many hats during the earliest days of their companies. In many cases, it’s necessary for a small business owner to be just as comfortable behind a cash register serving customers as sitting at a bargaining table negotiating with potential business partners. They must also contend with marketing issues, maintaining cash flow, managing overhead, and hiring and training new employees.
In virtually every one of these and many other scenarios small business owners will face, negotiation tactics will come into play. It’s necessary for modern small business owners to understand the elements of negotiation and implement effective negotiation strategies in every aspect of running their companies, eventually becoming savvy negotiators themselves. Learning effective negotiation strategies is essential for any small business owner.
Know Your Objective
The average small business owner can likely list at least a few ongoing objectives, immediate objectives, and long-term objectives when it comes to running their businesses. One of the most important elements of effective negotiation is knowing your current objective and gearing the negotiation toward helping you accomplish that objective. However, it’s vital to maintain a clear understanding of the big picture and not become too focused on an immediate objective, such as closing a sale, that one becomes fixated to the point of developing tunnel vision.
One of the most common negotiation mistakes small business owners make is sacrificing long-term success for short-term gain. An effective negotiator will know when a win-win is possible for both sides of the bargaining table, when to be more aggressive, and when to back off because they understand the bigger picture and remain faithful to their objectives.
Preparation Is Crucial
Never run into any type of negotiation unprepared. While some negotiations may unfold unexpectedly, it’s a good idea to prepare whenever the situation allows. This is a multifaceted concept. Preparation involves the research you conduct on the other party, their needs, goals, and what they can offer your business before negotiations take place. However, it also applies to preparing yourself before responding to the other party’s proposal or responding to a counteroffer to your own proposal. Prepare before sitting down at the bargaining table, but also take to prepare before every one of your responses.
Whenever possible, conduct research on the other party prior to negotiations. Digging in the right places can reveal all kinds of opportunities for you to strengthen your bargaining position and achieve more desirable results. While negotiating, remain cool and take your time before responding so you can articulate your thoughts appropriately and steer the conversation in a favorable direction.
Never Be Intimidated
Small business owners will need to quickly adjust to facing aggressive bargaining tactics. Many negotiators believe aggression is the key to getting what you want, and this approach is more effective than you might realize. If the other party has taken the time to negotiate with you, then you must have something to offer them. Don’t be intimidated by strongarm negotiation tactics and give ground when you don’t need to make concessions. A small business owner who encounters unexpectedly aggressive negotiation tactics from another party should think carefully about why the other party might be taking this approach; your analysis could reveal a valuable insight and actually strengthen your bargaining position.
Too many small business owners fall into the trap of feeling uncertain in the face of an aggressive bargainer. If you encounter this kind of situation, maintain your confidence, and do not allow yourself to appear shaken or easily swayed; this will only cause the other party to press harder. Show the other party you are unphased and aim for creating a win-win scenario instead of just “winning.” Responding with aggression of your own will likely lead to a breakdown of negotiations and neither side will get what they want.
Understand the Roles of Perception and Emotion in Negotiation
One of the most important negotiation strategies for any small business owner to develop is the ability to discern how the other party perceives one’s bargaining position and displaying appropriate emotional responses. The way the other party perceives you will strongly influence their participation in the negotiation. When your emotional responses indicate that you are passive, disinterested, or aloof, the other party may take this as an insult and negotiations will begin to break down. The same thing might happen if you demonstrate overconfidence, arrogance, or bullish negotiation tactics.
When you demonstrate a cool, calm, and collected attitude you are generally perceived as someone with a solid bargaining position. The other party will recognize this and likely aim for the same type of win-win scenario you want to create. Vocal tone, body language, and emotional displays are all crucial elements of any kind of negotiation, and all parties involved will make various inferences based on these variables.
These tactics may seem like basic negotiation principles, but it is incredibly common for small business owners, especially new ones, to put them into practice effectively. The right small business negotiation strategies can make a tremendous difference in a small company’s early growth.