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Negotiating effectively in business requires careful planning, good communication skills, and the ability to find common ground with the other party — one thing you’ll notice across the board is that a win-win is the goal, otherwise, you’ll only negotiate once (because the other guy won’t want to deal with you again). So if you’re in it to win it (for everyone), then here are some tips for negotiating effectively:
- Define your goals and what you hope to achieve. Determine your ideal outcome as well as your minimum acceptable outcome. Know what your “walk-away point” is [you’ll commonly see this referred to as the “BATNA” (Best Alternative To a Negotiated Agreement)].
- Research the other party, especially what they want and need. Know their interests, history, and priorities. This will help you understand their perspective and find areas of mutual benefit. Knowing what someone on the other side needs ensures that you aren’t offering something they have no interest in (the old joke is don’t offer to cook if I’m not even hungry!).
- Identify areas of common ground and shared interests with the other party. This will help build trust and establish a foundation for a successful negotiation. Oftentimes this can allow you to reach an agreement on the ‘easy’ stuff so you can come back to the contentious topics later.
- Use active listening, which involves paying close attention to the other party and seeking to understand their point of view. This will help you identify areas of agreement and disagreement.
- Offer creative solutions that meet the needs of both parties. This may involve compromising or finding alternative solutions that satisfy both parties. Remember what your non-negotiables are — if you’re considering compromising on them, then are they really non-negotiable? Planning is critical.
- Remember that it’s never personal. Stay calm and professional throughout the negotiation, even if you encounter obstacles or disagreements. Avoid personal attacks and focus instead on finding a mutually beneficial solution.
- Don’t be afraid to take a break. Asking to step away when things are becoming unproductive isn’t a sign of weakness, it shows the other side that you are there to accomplish the goal and not get derailed by the noise (but remember your walk-away point).
- Follow up after the negotiation to ensure that the agreement is being implemented as planned.
By following these tips, you can negotiate effectively in business and achieve your goals while building strong relationships with the other party.
And remembering that negotiations have to be mutually beneficial helps to prevent breakdowns and walkouts. But, as we mentioned earlier, sometimes they fail despite everyone working towards a win-win. If that does happen, it can have a range of consequences. Here are a few common scenarios:
- No deal is reached. This means the original issue(s) or problem(s) remain unresolved and may require further negotiation or alternative dispute resolution methods.
- The relationship is damaged. Unsuccessful business negotiations can damage relationships between the parties involved. If the negotiation process becomes contentious, it can lead to mistrust, resentment, and damaged relationships that can impact future business dealings.
- Legal action. In some cases, unsuccessful business negotiations can lead to legal action. This may occur if one party feels that their rights have been violated or that the other party has breached a contract. Legal action can be costly and time-consuming, and may further damage relationships between the parties.
- Missed opportunities. Unsuccessful business negotiations can also result in missed opportunities for both parties. If a deal cannot be reached, it may prevent the parties from taking advantage of potential benefits or opportunities that could have resulted from a successful negotiation. Focusing on mutual benefit helps the other side know that you are seeking a win-win for everyone.
It’s important to approach business negotiations with a clear understanding of your goals, a willingness to compromise, and an open mind to alternative solutions. However, if negotiations don’t work out, it’s important to remain professional and respectful, and to explore alternative options for resolving the issue.
