Negotiating can help pave the way any time two or more parties need to come to a mutually beneficial arrangement.
But although more than half (60%) of the respondents in one recent poll agreed negotiations are—first and foremost—an opportunity to reach an agreement, 40% cited lack of tools, skills, or confidence as the biggest barrier to negotiating successfully.
If making deals doesn’t come naturally to you as a small business owner, you’ll be delighted to know you can learn to negotiate with clients, suppliers, and other business professionals.
In this short guide, we’ll break down what negotiations are, the basic skills they rely on, and the best way to prepare for a successful encounter.
What are negotiations?
Simply put, a negotiation is a discussion aimed at ironing out a dispute or furthering an accord, understanding, or contract. Most negotiations require a level of compromise on either side in order for both parties to benefit.
The more you can do to develop your negotiation skills—and the more time you spend practicing them—the sooner you can expect to reach a satisfactory business agreement more often.
Basic negotiation skills
Since most negotiations necessitate some level of human interaction, it should come as no surprise that soft skills like communication, adaptability, and problem-solving play a key role in successful business discussions.
Here are 5 of the most valuable negotiation skills.
- Interpersonal skills: Learning to build rapport during a negotiation—by managing your emotions and demonstrating an understanding of the other person’s needs—helps put discussion partners at ease, while encouraging them to see the benefits of what you’re proposing.
- Effective communication: You’re more likely to avoid misunderstandings that can stall or derail a negotiation if you focus on listening actively and adopting language that’s positive, clear, and engaging.
- Flexibility: Practicing patience and open-mindedness as you negotiate lets you see and assess both sides of the situation more clearly so you can set realistic expectations around the best possible outcome.
- Problem-solving: Rather than taking a competitive or conflictual stance, approaching every negotiation with the goal of finding a solution can make it easier to identify hurdles and uncover ways of working around them.
- Decisiveness: Once you’ve done all you reasonably can to listen, problem-solve, and compromise, recognizing when it’s time to pull the plug and make a decision about moving forward is key.
Preparing for successful negotiations
In addition to soft skills, having a well-thought-out plan can be a big advantage as you prepare to negotiate.
For example, before any business agreement discussion you should take steps to:
- Figure out your priorities. Since you’re unlikely to get everything you want from a negotiation, you’ll need to get clear on what your ideal outcome looks like, which results are most important to you—and what you’ll realistically settle for
- Understand any decision-making limitations. Not only should you find out in advance how much power the person you’re negotiating with has in terms of granting what you want, you should make it a habit to negotiate exclusively with decision-makers whenever possible
- Nail down what you’re willing to offer or concede. You’ll find it much easier to negotiate effectively if you know exactly what you’re willing to give away—or give up—to arrive at the most favourable solution
Don’t forget to also give some thought to what you’ll do if an agreement isn’t reached—and how you’ll know when the time has come to walk away.
In short, the best way to prepare for successful business negotiations is to lay out the most likely outcomes ahead of time, and have a specific, skills-based plan for dealing with each scenario.