Although business negotiation seems like a game where each party tries to win more than the other, successful negotiation is a win-win strategy that has value for everyone involved. If you are satisfied with the outcome of a negotiation, you are likely to build on the relationship. When you negotiate mutually beneficial outcomes, you develop trust and goodwill, setting the stage for ongoing fruitful collaboration.
Why are Business Negotiation Skills Important?
Effective business negotiation may benefit your business in the short term while building productive relationships in the long term. Honing your negotiation skills makes it more likely you will get what you want when you go into a negotiation. You buy supplies from vendors and sell your goods to customers and each of these transactions has clear and fair terms. Clarity helps ensure that each party knows what is at stake in any business agreement. Fairness sets the stage for an ongoing partnership by building trust. Negotiation is the process of creating this synergy with the people you do business with.
What Skills are Important for Business Negotiation?
A skillful negotiator keeps his eye on the ball and knows what sacrifices he needs to make to achieve a successful outcome. He comes to the table with clarity about what is negotiable and what is not. Interpersonal skills are vital for successful business negotiation and the ability to build rapport is key. If you are a good listener, you will understand what your negotiating partner wants from you. Active listening skills mean that you ask questions and paraphrase their answers back to them with your interpretation of its meaning. This process ensures you have understood your negotiating partner’s message. For example, when your fellow negotiator suggests you invest $30,000 in a project under discussion, but does not give specific details, you can say, “I understand you are asking for $30,000 before we can go forward with this deal. Is that correct?” She may reply, “No, we can design some preliminary plans, but you would need to give us the $30,000 within 15 days of breaking ground.” Now you know what she wants.
Business Negotiation Dynamics
Aside from mastering the art of interpersonal communication, business negotiation involves some well-thought-out strategy. If the negotiation involves financial matters, the first dollar amount introduced carries a disproportionate amount of weight in a negotiation. In negotiating etiquette, if you suggest it first, you gain the upper hand. Introducing alternatives that you find acceptable shows your flexibility while giving your negotiating partner a choice among several scenarios. Proposing contingency plans allow you to frame the conversation on your own terms while simultaneously making your negotiating partner feel comfortable with the negotiation.
Devra Gartenstein founded her first food business in 1987. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills.