How to Negotiate in Business
Knowing how to negotiate in business is one of the most important skills you can develop. Especially if you’re going to make the shift from employee to entrepreneur. Anyone in business can benefit from learning how to negotiate. But those in sales and those starting their own businesses need this skill.
This is how you’ll be able to get deals done for the company you’re a wage slave for or better yet for your own business. Negotiating is a big part of closing business.
Figure out what you both want
The first step to determining how to negotiate is to figure out what you both want. Two people want something in a deal. Your potential customers wants the product/service and you want their business to grow your revenue.
They might want a better price, more features/services, or just the result that your offering will provide them. You’ll want the cash in your wallet if you’re a sales guy. And if you own a business, then you’ll want this customer to help grow your company and get you to be rich.
But learning how to negotiate in business can figuring out what you both want can be applied broadly. For example, if you work for a big company, you could negotiate with a fellow employee to get something done. Or you can even negotiate with potential competitors to work together.
They key is to know what each of you desire out of the deal so you can plan your next move.
Determine a way for you each to benefit
Now that you know what you both want, negotiating in business comes down to determining a way for each of you to benefit.
In a sales situation where you’re the seller, that may means doing a deal that meets all their needs and pays you well. They benefit by getting the product/service that will provide value to them. And you benefit with their business.
This can differ a lot with other non sales related negotiations. But if you can figure out a way for both parties to benefit, then both of the parties will have motivation to move forward.
Make an offer slightly in your favor
In a sales specific situation, the next move is to make an offer sightly in your favor. If the other person accepts, then you’ll in a great position. If they decline, then you can make an offer that’s more neutral.
I should note that this can backfire on you. If the other person has a lot more power in the situation than you, meaning you need them more than they need you, then you might want to reconsider this approach. You’re better off with offering a neutral agreement.
Or if you’re working with a friend, or someone you generally have high trust with, then you should offer a neutral deal to begin with.
However, most people in business will try to take advantage with you so they can get the best deal for themselves. It’s not personal, it’s just business.
And unfortunately, some people will try to negotiate no matter what. If you haven’t worked with them before and don’t know their habits, and the power is more or less equal, then this approach is deal. Because if you offer a more neutral offer first, then they’ll still try to negotiate in their favor.
So as long as the power is in your favor or close to equal, then create an offer slightly in your favor. Not over the top. Nothing offensive. But just a nudge in your direction.
Wait for the other person accept or to reject / counter
Next step in learning how to negotiate is to wait. They’ll either accept your offer, in which you win, or they’ll reject + counter. If they accept then you have gotten a good deal for yourself.
But don’t expect them to. Instead, expect that they’ll counter yours. On a scale from 0 to 10, with 0 being in their favor and 10 being in yours, your offer should’ve been a 5.5 or a 6. If they counter with a 5 then you have the option to accept. If they counter with a 4 or less, then you shouldn’t accept. Unless that is they have more power and you need them more.
Then counter their counter / rejection with an offer more fair
So let’s say they counter with a deal that’s a 4 / 4.5 . Reasonable, but in their favor. Now you just counter with an even 5. Meaning it’s a fair deal for you both. If they accept then you have a deal and can move forward.
If not, then it’s up to you how you want to handle things. You can accept their low offering if you’re desperate. But it’s much better to try and get something even.
Know ahead of time
Know what you’re willing to take in a deal before you enter negotiation. Otherwise you might accept a deal that is lesser than what you should have. There will be times in sales, especially when you’re starting out, where you need to grow revenue and accept lesser than ideal deals.
However, that should be limited. This is even more true once you begin to grow your brand as an entrepreneur. You should work to ensure you have a valuable product/service that customers want to pay for. Determining how to negotiate in business is much easier when you have something that others want to buy.
Why not just offer a fair trade?
I know a lot of people are going to read this and say that you should just offer a fair 5 to begin with.
This can work if you know the person you’re doing business with, or if you have high trust in them. This is the ideal situation. However, if you want to get ahead in business, you’re going to need to offer things slightly in your favor. Many people in the real world will try to take advantage of you otherwise.
And if you’re just starting out in sales or in a business, they know that you have numbers to hit. Don’t let people take advantage of you like this.
Offer things slightly in your favor. People will perceive you as more valuable if you do this. Even if they don’t agree, they’ll know that you’re not desperate for a deal. Which will result in a more fair interaction.
If you want to think that everyone wants to be fair and do good business then you’re wrong. I wish the world was like that. And there are many business partners I’ve had who are authentic, stand up guys, and who do fair deals.
But this isn’t the norm. Even decent people who wish no ill will on you will try and get the best deal for themselves. So make sure you’re looking our for yourself and your business. When learning how to negotiate in business, it’s still vital that you deliver on what you promised. Reputation is critical. You also want your customers to get what they pay for. Just be sure that you don’t undervalue yourself in the process.
The most powerful position in negotiating is saying no
Just like with dating, the most powerful position being able to walk away. But with girls, it’s different because they’ll usually chase you. You have an ability to create an amazing product (yourself) by raising your sexual market value.
In business, customers might chase you, but only if they see the value in your offering. It’s not the same as dating where the majority of men are desperate fucks and just by not blowing up a girls phone you stand out. But when you can walk away easier than the other person, you’ll probably going to get the deal you want.
That’s how you get a pimp mentality in your relationships. You get the ability to walk away.
Learn to Negotiate in Business
Negotiating in business is how you get deals done, grow your company, and make revenue. It’s essential that you collaborate with others as a sales guy, an entrepreneur, or even a a different type of employee in a business.
Learn how to negotiate in business so you can get ahead and get things done with others.