Negotiating Skills for Small Business Owners: How to Get the Best Deals – FFFF #020

Negotiating Skills for Small Business Owners

As a small business owner, negotiating is an essential part of your job. Whether you're negotiating prices with suppliers or closing a deal with a potential client, your ability to negotiate effectively can have a significant impact on the success of your business and negotiating skills for small business owners are key. 


In this newsletter, we'll share some actionable tips and strategies that can help you improve your negotiating skills and get the best deals for your business. We'll cover everything from preparation and strategy to communication and persuasion. So let's dive in!



Preparation:

The first step to successful negotiation is preparation. Before you enter into any negotiation, you need to be fully prepared with all the information you need. This includes:


  1. Knowing your goals: What do you want to achieve from the negotiation? Do you want to lower the price, increase the quantity, or get better payment terms? Knowing your goals will help you focus on what you want to achieve.

  2. Researching the other party: Knowing the other party's strengths and weaknesses can give you an advantage in the negotiation. Research their business, their products or services, and their negotiation history.

  3. Identifying your BATNA: Your BATNA (Best Alternative to a Negotiated Agreement) is the alternative solution you can pursue if the negotiation fails. Knowing your BATNA can help you determine your negotiation strategy.

  4. Setting your limits: Before entering into a negotiation, set your limits on what you're willing to accept. This can include price, quantity, or any other relevant terms.



Strategy:


Once you've done your preparation, it's time to develop your negotiation strategy. Your strategy should take into account your goals, the other party's strengths and weaknesses, and your BATNA. Here are some strategies to consider:


  1. Anchoring: The anchoring technique involves making the first offer and setting the tone for the negotiation. If you make a lowball offer, the other party may think that they can push for an even lower price. If you make a highball offer, the other party may think that they can't get a better deal and may accept your offer.

  2. Framing: Framing involves presenting the negotiation in a particular way to influence the other party's perception. For example, if you're negotiating with a supplier, you can frame the negotiation as a long-term partnership instead of a one-time transaction.

  3. Building rapport: Building rapport with the other party can help to establish trust and create a positive negotiating environment. This can include small talk, finding common ground, and using humour.



Communication:


Effective communication is critical in negotiation. You need to be able to articulate your points clearly, listen actively, and persuade the other party to see your point of view. Here are some communication tips to consider:


  1. Active listening: Active listening involves paying attention to the other party and demonstrating that you understand their position. This can involve asking clarifying questions, summarising their points, and acknowledging their concerns.
  2. Nonverbal communication: Nonverbal communication can play a significant role in negotiation. This includes things like body language, facial expressions, and tone of voice. Make sure your nonverbal cues are consistent with your message.
  3. Persuasion: Persuasion involves presenting your points in a way that's compelling and convincing. This can include using evidence, telling stories, and appealing to the other party's emotions.




Negotiation is an essential skill for small business owners. With the right preparation, strategy, and communication, you can get the best deals for your business. Remember to focus on your goals, research the other party, and set your limits before entering into any negotiation. Develop a strategy that takes into account the other party's strengths and weaknesses, and use communication techniques like active listening and persuasion to achieve your goals.


Actionable Points:


  1. Set your goals and limits: Before entering into any negotiation, be clear on your goals and what you're willing to accept. Set your limits on things like price, quantity, or other relevant terms.
  2. Research the other party: Do your homework on the other party before entering into a negotiation. This can help you identify their strengths and weaknesses and develop an effective negotiation strategy.
  3. Identify your BATNA: Your BATNA is your Best Alternative to a Negotiated Agreement. Knowing your BATNA can help you determine your negotiation strategy and give you a fallback plan if the negotiation fails.
  4. Develop your negotiation strategy: Develop a strategy that takes into account your goals, the other party's strengths and weaknesses, and your BATNA. Consider techniques like anchoring, framing, and building rapport.
  5. Communicate effectively: Effective communication is critical in negotiation. Use active listening, nonverbal communication, and persuasion techniques to get your point across and persuade the other party to see your perspective.
  6. Practice: Negotiation is a skill that can be improved with practice. Look for opportunities to negotiate, even in small situations, to develop your skills and gain confidence.
  7. Don't be afraid to walk away: Sometimes, the best deal is no deal. If the other party isn't willing to meet your goals or if the negotiation isn't going in your favour, don't be afraid to walk away and pursue other options.


In conclusion, negotiating is a critical skill for small business owners. By following these actionable points and developing your negotiation skills, you can get the best deals for your business and improve your chances of success. Remember to prepare thoroughly, develop a sound strategy, and communicate effectively to achieve your goals.


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About the Author

Annette Ferguson 

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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