Ever try to negotiate with a toddler? You'll soon find one of the first words that they learn is "no," and they use it every chance they get to let you know what you're offering doesn't work for them. You don't have to cross your arms and pout, to see the lesson learned from them in how most entrepreneurs negotiate.

As a small business owner, you are probably optimistic to a fault and eager to please. You focus on making customers happy at all costs, so you are willing to take on an immense amount of pressure to avoid ever having to say the dreaded word "no." 

This is a shame, because there's so much power in that single word. When used thoughtfully and intentionally, it creates negotiating leverage, but more importantly it changes the entire psychology of the decision-making process.

For example, a friend of mine, who owns a manufacturing business, invited me for a tour of the plant. As he looks to scale his business, he can confidently state he has the most precise, and even perfect, widget on the market, in the world.

After we finished the tour, I asked him how the business was scaling, and whether he is bottlenecked by supply or demand. His answer was "a little bit of both," which was both interesting and telling.

Then, he kept stepping out to take calls. Two calls later he had committed two more orders for the following day. "My production manager is going to kill me when he gets in tomorrow morning," he said, only half joking.

I then shared my experiences from the software world of relearning how to say no to a customer when they wanted to buy my product--but on terms that would put undue strain on the business. I didn't want to pressure my team to constantly hit unreasonable go-live dates for complex implementations just because the "customer was asking for it." The issue for your business could be delivery terms, payment terms, or any number of other negotiating points. In my friend's case, he's running himself (and his team) ragged trying to meet 24-hour turnaround timelines for his widget, while allowing customers to pay 90 days later. 

How to say no, and use the opportunity to negotiate for a yes.

If this is happening to you, it may be because you are afraid to say the word no. Use the opportunity to not only say no, but also negotiate a more appropriate, scalable arrangement for your company and set better expectations that you can actually meet. Here are two easy ways to do it:

  • "No, it doesn't make business sense for us to deliver that order on 24 hours notice, but I'll be happy to sign you up for a monthly recurring delivery on the 1st and 15th of every month for the next year."
  • "No, we don't have any more implementation engineers available for a 30 day turnaround, but if you sign the contract now we can put you on the calendar for 90 days out."

"No, I won't" rather than it's weaker cousin "I'd like to, but I can't" puts you in control of the negotiation. It puts you in a position of strength and invites a counteroffer to find a compromise. It signals scarcity and strength, a confidence that people look for in business partners.

The next time you feel yourself getting stretched and preparing to make a commitment that is not in your company's or your team's best interest, try channeling the enlightened toddler inside you and say no. 

Your team will love you for it, and whomever you're negotiating with will probably come to respect you more. Most importantly, you'll start to regain your sense of agency and control over the decision-making process and negotiation cycle.