If you know your way around a negotiation table, there is no stopping you. You can negotiate for better prices with your vendors, new hire and existing salaries, contracts with sales prospects and long-term clients and lower overhead costs in general, leading to higher profit margins and more capital to scale your business.
Natural Born Negotiator
Over the past 25 years, I have coached thousands of business owners. And each one came to the table with a very different set of skills. Some came to the table with am amazing talent for marketing and sales, while others inherently knew their way around manufacturing and product development...etc. Every client we coach is unique, but there is a particular skill set that is exceptionally high paying: Negotiation.
Sadly, the majority of business owners aren't born negotiators. When we asked our top 35 most successful entrepreneurs "How many of you would consider yourselves 'ultra-negotiators' who are fluent in and love negotiating?"
Out of 35 business owners, only two raised their hands.
That floored me. Considering the business success that these people have had, I thought the numbers would be much different. Millions of dollars were being left on the table each year by these 35 business owners, so I felt compelled to share the secrets to negotiation.
The 6 Important Negotiation Skills The Rich Don't Want You To Know
- Be Clear on Your Negotiating Goals. This seems pretty obvious, but the majority of business owners show up to the negotiation table without a clear cut idea of what they want to achieve at the end of the day. This rookie mistake can cost you millions. Consider your answer to the following. Tip: Don't share the answers to # 1 or #2 at the negotiation table. This is strictly for your eyes only.
- What's the best possible outcome? Is it that you get the price down to under $30,000? Or that you lock in a 3 year contract? If the stars were to align, what would you want to see happen at the end of the day?
- What is the least acceptable outcome? What is the least acceptable offer you are willing to accept? Anything beyond this line means you would walk away from the table.
- What's your plan B? Roger Fisher and William Ury, members of the Harvard Negotiation Project and the authors of Getting to Yes, call this your "BATNA" -- your best alternative to a negotiated agreement. Essentially what you're doing is creating your alternative(s) -- your plan B or even plan C or D -- to what you'll do if the deal goes beyond your least acceptable outcome. The stronger your plan B, the stronger you will be in the negotiation.
Develop a Core Negotiation Strategy (CNS). Core negotiation strategy is all about finding the doorway that you want to enter the negotiation through.
One of our coaching clients, Lorraine, brought up a particularly interesting negotiation challenge that she was faced with. She owns the 6,000-square-foot commercial building that her company operates out of -- as well as the acre of land that it's on. But the city wanted to take out an eight-foot easement on the front of her property, which would have killed her parking lot.
When I asked Lorraine what her strategy was prior to the negotiation, she said that she would tell the representative from the city planning department that this easement adversely and unjustly affects the value of her property.
But I pointed out that a city planner might not be especially concerned about the value of her property. So I asked Lorraine to give me more information about why it lowers the value of her property.
It turned out that one of the reasons is that she has a lot of big, industrial trucks that come in and out of her property with huge equipment. If the city took those eight feet of property from her, the trucks would have to back into the street every time they want to get in and out.
So she went to the negotiation table with a plan. Instead of entering the negotiation through a doorway of fairness, she went in through a doorway of safety and liability. She explained to the city that it wasn't safe to have the trucks backing into the street and it would create a lot of liability for both her and the city.
As of this month, she has successfully negotiated with the city to keep her full parking lot sans easement.
Get to Know Your Negotiation Personality. When it comes to the negotiation table, your personality is going to play a part in the proceedings. Are someone who speaks softly and is easily intimidated, or are you someone who goes in hard with a lowball offer? Do you tend to fixate on price or one key variable in the negotiation, or do you have strong creative vision to craft a solution outside of what most people see? Are you more a "by the number" person, or are you more about connecting and empathizing with your negotiating counterpart? There is no right or wrong answer here, the key to being a skilled negotiator is understanding the style that you naturally gravitate towards and understanding the strengths and limitations of your negotiating personality. Over time, this awareness is a key step in developing greater negotiating range and flexibility.
Put Yourself in the Other Person's Shoes. You know why you sat down at the negotiation table, why did they? Ask questions that help you understand their drivers and that build their emotional motivation to do a deal.
Speak Slowly and Softly. Manipulate your voice to sound more reluctant and un-enthusiastic about the proceedings. When it comes to negotiations, there is almost always an eager party and a reluctant party. The most skilled negotiators always play it cool and force the other party to be the eager side.
Use Reluctant Body Language. An eager party is tense and leans forward with their feet underneath them ready to pounce. Do the opposite by sitting with your feet in front of your body at a 90 degree angle and rounding your shoulders. This will give off the subconscious vibe that you aren't eager to make a deal.
Don't leave money on the table. After 25 years of negotiations, I can assure you that these six strategies will help up your negotiation game and get to richer, more profitable deals.