Small Business Owners – Master the Art of Negotiation

As a small business owner, you will need to negotiate on a regular basis. This could include negotiating contracts, getting better deals from your suppliers, as well as settling disputes between your employees and clients. So it definitely pays to have strong negotiation skills in your entrepreneurial arsenal. Let’s look at how you can do a better deal.

1. Determine exactly what it is you want

Before you enter into any negotiation you need to do a little bit of homework upfront. This includes being very clear and very precise about exactly what it is you want. Then prepare a bottom-line compromise position. Have very clear outcomes defined i.e. I want this outcome, by a certain date at x price. This gives you room to move in your discussions, starting with your ideal position and stop at the line in the sand that you have drawn.

It also pays to know what you can’t accept. Being aware of your limitations ensures that you will not, in the heat of the negotiation, accept a position that will put you at risk.

2. Ensure you are negotiating with the person who has the authority to say ‘yes’

There is nothing worse than going through a negotiation and then find out that the person does not have the authority to sign off on the deal. Simply ask at the outset, “who has authority to sign-off on this deal?” and go directly to that person.

3. Aim for a Win-Win outcome

Negotiations do not have to be adversarial. This is one of the biggest mistakes people make when negotiating. If you go into them with a mindset of win-win, and aim to satisfy each of the parties involved, you are much more likely to be successful and the deal is less likely to come back and haunt you.

4. Apply Proven Strategies

There are a few strategies you can employ to help you negotiate a better deal. But bear in mind, when employing these strategies, that you don’t want to make the party you are negotiating with feel like a loser. Win-win should always be top of mind.

Some excellent strategies include resisting your first offer – unless it is exactly what you want (sometimes simply putting your request on the table is enough). Another is to act reluctant and the other party may be inclined to up the ante based on your perceived resistance. Pretending to flinch can help you gain concessions. You can play dumb by saying you need to run it by someone else in higher authority and come back the following day saying that the ‘higher authority’ wants certain concessions. Another is to simply walk away.

If you are new to negotiating, try your newly learned skills out on smaller deals first. Preferably ones that don’t have much pressure attached. Then continue to build your skills so you are able to deal more effectively. Your business will be much better for it.

Why You Should Be Present at Your Home Inspection

A good home inspector will give you a detailed report. You can then take that report to the seller and discuss any outstanding items or issues that need to be resolved. Since you’re getting a report anyway, you don’t have to be present at the inspection, right? Wrong. Being present at the home inspection is one of the most important parts of closing on your property.

See and Discuss the Defects

It’s absolutely vital that you attend a home inspection because you need to see and discuss the defects as your inspector presents them. If you have questions about a particular issue, ask them. If you don’t understand whether a problem is minor or major, your inspector can explain it and help you understand why something may cost only a few hundred dollars to repair, or why you could be looking at a repair running thousands of dollars.

Home inspectors may be able to give you an idea of how much repairs will cost to fix, and recommend contractors who provide good rates and do good work. You can also ask the inspector to show you important parts of the property, such as the furnace, circuit breakers and water heater. Having the inspector present to answer your questions about these systems is probably your best opportunity to find out more about your house before you buy.

Have the Seller’s Agent Present

Being present at the home inspection yourself is for your understanding. You should also have the seller or the seller’s agent present at your inspection, so they can see anything the inspector uncovers. In some cases, sellers might genuinely not know about potential issues with their home, and may not believe it or understand the extent of an issue you report to them. In other cases, the seller is aware of potential issues, but might deny them to avoid costly negotiations. Either way, having the seller or the seller’s agent present negates these issues, because the seller is much less likely to debate about issues that he has seen with his own eyes.

Negotiation Techniques

How good a negotiator are you? Do you push back or do you not try to counteroffer? Many people do not realize that most products and services are negotiable. When you buy a car it is expected to haggle with the salesperson over price but why is that not the case in other scenarios? In the workplace, how many accept the first compensation package that is provided or the standard raise rate and not think to question it?

Before one can start to negotiate, there are steps that need to be taken first. Many do not think about negotiations until they receive an offer – job, car, product, service, etc. The issue with this is that they do not spend the time researching and contemplating what the value is in the marketplace BEFORE they start the process. Instead many either accept what is offered and do not negotiate for more, or they use a simple formula like an increase of 10% on their cash compensation if in a job search or just accept free car mats. These individuals may miss out not only on more money in their pockets but also on perks. That is why negotiations are so tricky!

The first step in the process is to realize that there is a real value and a perceived value. As an example, a person is being hired by a company because he/she possesses an expertise that is lacking in the organization so they need this person. Products that are fashionable or are attached to a famous celebrity or brand name command a higher price but may not necessarily be any better quality. For these reasons, it is imperative to make a list of all the attributes either you as a job seeker possess, or you as a consumer want in a product or a service.

The research phase is very critical and will take a lot of time to do. Not only review various books and websites but also contact those who are experts in that particular field, position, owned that product, or have used that service. Do not ask basic questions like “do you like it?” but delve deeper. Ask them what research they conducted; what challenges they faced; and would they go through that experience again. In addition, question them on what kind of negotiator they are so that you can learn tips on what language to use, etc. If you do not have a robust network, use LinkedIn for job seekers and ask for references from the companies you want to do business with. Now develop the bottom line numbers that you would need to make a move or to make that purchase and make sure it aligns with your personal budget.

What type of negotiator are you? You may not realize this but you probably are in some sort of negotiations almost every day besides the ones mentioned above. This could even include negotiating with your child on his curfew time or if he can have a cookie after dinner. Regardless of the scenario, there are intrinsic characteristics about yourself that define what type of negotiator you are. According to the book, Bargaining for Advantage by G. Richard Shell there are negotiation styles/strategies. It is possible to use a different one depending on the situation but most people tend to fall into only one category.

• Avoidance – you do not like to negotiate so you just don’t.

• Compromise – this entails each side coming to some agreement that the gains are equal between them. An example of this is that you make an offer on a house that is 20% below asking price. The seller counters and you end up in the middle.

• Accommodating – this is not practical in a job search negotiation because the job seeker is the one who is going to lose out. The company is not doing you any favors by not giving you what you want so why would you agree to a compensation plan that doesn’t work for you either? The reality is that by being nice and accommodating, you are the one who has the most to lose. Some human resources professionals and hiring managers may try to bluff you by saying “we never have someone at a base salary for this role at this amount but for you we are going to do it”. Believe me, they have looked at the numbers and had discussions about what parameters they can offer the final candidate.

• Competitive – this strategy will work well in situations where it is expected that the parties negotiate competitively, i.e. buying a car. Regardless of how aggressive you want to be in your negotiation tactics, it has to be done in a way that does not come across as abrasive and/or unrealistic.

• Collaborative – this approach can be viewed as the most creative but can also be the most time consuming. This consists of brainstorming ideas and resolving tough issues to come to an amicable offer. Suppose the base and bonus the hiring company is offering is fair but you are going to lose your spouse’s salary with a relocation. The company is willing to provide outplacement services for your spouse but that is not good enough. You may counter that you want a sign on bonus and also a consulting assignment for your spouse for a set period of time or until he/she secures a full time role. You and the company may continue countering each other with some other innovative ideas, but as stated before this takes time and may need buy in from higher ups as well.

Regardless of your style, gender, etc., the critical component in negotiating is to be a good listener and watch the body language of the person making the offer if possible. One can negotiate more effectively if there is greater attention paid to inflections, words chosen, etc. Keep in mind too that all of us bring expectations to the table when we negotiate but we also bring prejudices. If you are the type of person who would be nervous while negotiating, I would suggest writing down what you want to say and practice. The more confident you sound, the better are your chances that you will receive the offer you want and deserve. In addition, recite your desires to a trusted adviser or friend and have them work with you on more powerful wording and phrases. As you prepare, try to anticipate how the other person is going to react and plan your proposal accordingly.

Now that you have done your research, identified what type of negotiator you are, and established some deal breakers, you are ready to negotiate. If possible, try to let the other party provide the offer first instead of you telling them what it would take for you to make a move or engage in this transaction. Do not react immediately to their offer. Tell them that you need a day or two (no longer!) to digest their offer.

Contact them in that time frame with your counter offer and expect that they may also want time to reply. Patience will be important because if you sound anxious or desperate, the negotiations will not work in your favor. Hopefully it will only take one or two counters for you to get to the appropriate amount you deem is fair and reasonable. Good luck!