Negotiation is a ritual as old as time, an ancient craft, dating back to when Homo Sapiens developed as a species. It was a prominent part of markets all around the world, and trading could simply not happen without good negotiation skills.
Nowadays, the ability to negotiate and get the best deal possible is still considered to be a vital skill. Business negotiation, in particular, is a crucial part of growing and developing your business.
In today’s article, we’re going to find out how to negotiate a business partnership, review some top business negotiation strategies, and gather a list of the best business negotiation tactics for success.
No negotiations now, let’s get it on.
7 Business Negotiation Tactics for Success in 2022
- Always be prepared.
- Never accept the first offer.
- Ask the right questions.
- Consult the best lawyers and advisors.
- Start with a low offer.
- Create urgency.
- Strategic use of body language.
- Don’t ignore alternatives.
- Be prepared to walk away.
1. Always Be Prepared
Being prepared to face business negotiations means you need to take care of several aspects beforehand. Things to do to prepare, include:
- Research the other company. Run a background check and try to thoroughly understand their business. Check their website, social media, articles written about their company, user reviews, and whatever other piece of information you can find.
- Review the personal background of the person you’ll be negotiating with. Sometimes, you can focus too much on the company and forget to also run a personal background check for the person you’ll be negotiating with. Again, look for the person’s bio on the company website, check their LinkedIn profile, and type their name into Google to find any additional information that could be relevant to know.
- Check previous deals. Inspect potential sources of information to see if you can find details about previous deals the other company has done. If the company is public (and in the United States), you can find info on SEC.
- Analyze the competitors. Check out the competitors of the company you’re about to negotiate with, and establish what are their prices and offerings. This will help you prepare to make a reasonable business offer.
2. Never Accept the First Offer
One of the most common mistakes when handling business negotiations is to accept the first offer. Why agreeing to the first offer is such a big no? First, it could make you look desperate. Second, the other party might think they’ve offered too much, and attempt to cancel the deal.
Furthermore, the buyer usually expects the first offer to be rejected and countered with another one. Back-and-forth negotiations have a tendency to bring deals to a successful closure, as both parties will be satisfied to have reached the best deal possible, and are more committed to closing the deal.
3. Ask the Right Questions
Asking questions is not something that you should be afraid of. After all, the answers you receive could be essential to the negotiations. Of course, it’s important to ask the right questions, in order to gain insights and find out more about the other person’s approach and mindset.
Here are some useful questions to ask, depending on the type of negotiation:
- Is this the best price you can offer?
- How does our deal benefit you?
- What guarantees can you offer that your product/service will work?
- What else can you add to sweeten the deal at no additional cost?
- When do you want the deal to happen?
- What part of the deal concerns you?
- What else do you think they should know?
- Is there any reason why you can’t?
4. Consult the Best Lawyers and Business Advisors
For important or complicated deals, it’s a good idea to get real experts on your side to help with negotiations and contract drafts. Hiring a top lawyer or advisor will not come cheap, however, it will be well worth the money, especially if you are negotiating a deal to sell real estate property or your company, for example.
Naturally, you should research the person you’re hiring and choose one that has experience in the particular field.
5. Start With a Low Offer
The business negotiation tactic of opening up with a low offer is also known as a lowball. This is a type of offer that is deliberately much lower than the seller’s asking price. One of the advantages of lowballing is to see how the other party will react to your offer.
Think of it as a bluff, use the first offer as a testing ground. It’s a standard practice to open negotiations with an offer that’s half the wanted amount. The same tactic is applicable when you’re the seller, but in reverse. Start with an offer that’s much higher than what you’re willing to accept.
6. Create Urgency
Creating urgency is one of the oldest business negotiation strategies, utilized in marketing all the time. The more time it takes for a deal to be completed, the more likely it is for the deal to fall through.
Keep in mind that time is not on your side. You should always look to be expeditive with responses, and also try to superintend other people involved in the deal, like lawyers. However, you shouldn’t rush through negotiations either, it’s good to take your time to secure the best terms for both parties.
7. Strategic Use of Body Language
One of the most elusive, yet very effective business negotiation tips is to demonstrate negative body language when you receive an offer you do not like. For instance, when you are given a lowball offer, you can visibly demonstrate via a flinch.
This reaction could speak more than a thousand words, and could cause the other person to change his tactics. Cleverly using your body language can really quicken complicated negotiations and bring success to your business.
8. Don’t Ignore Alternatives
Having competitive alternatives can enhance your negotiation position by allowing you to choose how to proceed. Quote prices often, when negotiating with two or more parties, so you can get better pricing or terms.
For example, if you are trying to sell your company, multiple bids will be advantageous for you. Once one of the bids reaches the price and terms that satisfy you, you can enter into exclusive negotiations with the bidder.
9. Be Prepared to Walk Away
You must be prepared to stand and walk away at all times, should the terms of the deal not suit you. Of course, it’s easier said than done, but still, in some cases this is the only appropriate action.
It’s a good idea to prepare yourself beforehand by setting a target price at which you would walk away, and data to back up why your asking price is reasonable. In case you are faced with an ultimatum which simply does not satisfy you, be prepared to walk away.
Business Negotiation Tips: What Not to Do
After we reviewed some of the most successful tactics of the negotiation process, now it’s time to take a look at some behaviors you should avoid doing at the negotiation table.
- Don’t let emotions control you.
- Don’t underestimate your value.
- Don’t be inflexible.
- Don’t rub it in.
- Don’t over-negotiate.
1. Don’t Let Emotions Control You
Business and emotions rarely go well together. Letting emotions interfere with your business negotiations can lead to poor judgement or unintentional blunders which could make the process very difficult, or stop it altogether.
Keep your emotions to yourself, stay calm and friendly at all times, even if the other person isn’t.
2. Don’t Underestimate Your Value
If you’re new to business negotiations, you might fall into the trap of underestimating the worth of your product/service/offering. Always remember, you and your organization have a lot to offer, so don’t just approach negotiations with low self-esteem.
To help avoid this, before the negotiation starts, write down the strengths of your company, so you can arrange the best terms for the deal.
3. Don’t Be Inflexible
All negotiations, be it for business or something else, require compromises from both sides. One of the best business negotiation tactics is to look for a deal that mutually benefits you and the other party.
Thinking solely about your own gains, and being stubborn, will likely result in failure. Outline which of your terms are essential to your position, and which points you can concede.
4. Don’t Rub It In
You’ve reached a successful outcome in the negotiations – you’ve won, good job. However, don’t go on to vigorously celebrate or inadvertently mock the other party. Sure, you might be on top today, but no one knows what tomorrow will bring.
You might end up working with that person, or even reporting to him. Also, put yourself in the other person’s shoes – would you be happy if someone rubs their success in your face, implying you’re a failure?
No? Well, then be professional after the negotiations end, just like you were throughout the process.
5. Don’t Over-negotiate
You have the upper hand during the negotiation, but that does not mean you should try to exploit it to the maximum. Think about the potential consequences: you might reach an unbelievable deal, but at what price?
Would it kill your relationship with the other party? In most cases, such relationships carry on conversations over time, so being too greedy can turn out to be counterproductive and disadvantageous in the long run.
Business negotiation tactics are, in practice, endless. There are numerous tips, know-how, and even entire books on the subject. Negotiation is an art, after all.
It’s okay if you are not a successful negotiator immediately, sometimes all you need is time and practice, and some great advice, of course.
Hopefully, after reading this article, you will be one step closer to mastering the art of business negotiation.