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Negotiating Techniques for the Small Business Owner

written by: Sylvie Colette•edited by: Michele McDonough•updated: 5/19/2011

While the art of negotiation seems to come naturally for some people, the rest of us need a little more help with the process. Learn key negotiating techniques that will prepare small business owners to confidently handle confrontations successfully.

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    The Art of Negotiation


    You negotiate all day long – with your family, your coworkers, employees, service people, and salesmen. A negotiation is any communication where you are attempting to achieve the approval, acquiescence or action of someone else. Most negotiations during your day to day life are small. But that does not negate the importance of each and every one. Knowing how to properly conduct a negotiation is one important key in running a business, and the skills will serve you well in everyday life. Learning how to negotiate will empower you and allow more respect, more money and more results to flow through your life.

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    Mission Statement

    The first step is one you have probably heard before, but the importance cannot be overestimated. Write a mission statement. This allows you to keep the big picture in mind with every dealing. Run everything through your own filter. Does that new direction or new purchase fit with your mission statement? Preparing your master plan and keeping it at the forefront of your mind will prevent you from being tossed about or swayed by the needs of others.

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    Gain an enormous advantage over average people by preparing, and take pride in overpreparing. Everyone is busy, but taking just a little extra time to study will give you the upper hand. The one with the most knowledge wins. Get excited about the preparations, you don't know what's around the next corner, but by being well read and observant, there is no need to worry.

    Use all of your resources – Internet, library, read reviews, ask experts.

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    Take Notes

    Research proves that the very act of writing things down improves your chance of remembering the information.

    Being able to "check your notes" is a good strategy in keeping things honest in a business negotiation. Check the latest data, recall previous conversations, and simply allow for the pause that this fact checking offers.

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    Set Limits

    Have you ever found yourself doing something you didn't want to, because you were unable to stick to your guns? Take charge of your time and your career by setting clear limits ahead of time – lines you will not cross. This can be as simple as sticking to a maximum time for phone calls or checking emails. Set the bottom line on the amount you are willing to pay for a product after doing your research.

    Know that setting sane limits and sticking to them may be difficult at first, especially if your were overly accommodating in the past. People will adjust. Knowing your boundaries is essential to success. Walk away from offers that don't jive with your mission statement or fit within your perimeters. There will be other possibilities. Don't limit your options by taking the second best. The time and energy you save can best be used in pursuit of your goals.

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    Set Goals

    Keeping your mission statement in mind, write out the goals you will need to accomplish in order to fully achieve your particular vision for your business. The mission statement is concise, the limits set the boundaries, and your goals are to be challenging and far reaching. Then take these goals and work backwards – lay the steps out that you will need to take to reach them.

    • Be specific.
    • Share your goals with supportive people. This will help keep you accountable and build a self-fulfilling prophecy. The key is to find supportive people and steer clear of the naysayers. Helpful encouragement is invaluable.
    • Set your goals high – challenging, yet attainable is the guideline. Setting goals requires research and gathering information that can be used in negotiating.
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    Listening is fundamental. You already know who you are, your mission statement is clear, your limits are spelled out, and you are keeping your goals in mind. Plus you are well prepared, have studied the facts, and have your notes in front of you. Now relax, sit back and listen. Ask questions, and learn from the other person.

    • Try not to assume what is going to be said, or dismiss it.
    • Sometimes nervousness will cause a person to talk too much and not even hear the other person. A technique for dealing with this nervous energy is to expend it by actively listening – restating or paraphrasing what the person has just said. Respond with "Let me see if I got that right..." and then repeat a short statement of what the person just said or recount, in your own words, what the person has been telling you.
    • Use proper body language – uncross your arms and legs.
    • Sit straight in the chair.
    • Face the speaker full on.
    • Lean forward.
    • Make as much eye contact as you can comfortably do.
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    Ask Questions

    Questions are your power tool. When you are listening attentively, you may find that the person speaking is not giving you the information you need. After doing your research, there will be things you will want to find out first hand.

    • Plan these questions out in advance. Planning allows you to follow the speakers train of thought while interjecting your questions.
    • Ask with a purpose, either for a fact or an opinion, and know what you are after and what you are getting.
    • Follow up general questions with more specific ones. The progression is natural and it keeps the conversation on task.
    • Avoid leading questions.
    • Don't assume anything – good listening requires that you don't assume anything about a person's intentions. For an example, instead of asking "Why does your company insist on overcharging for this item?" ask, "What does your company charge for this item?" then "What do other companies charge for this item?" and finally "Why do you think a discrepancy in pricing exists?"
    • Ask open ended questions – avoid those that have yes and no answers. "What do you like best about such and such?" or simply, "Tell me more."
    • If you are doing all of the above and still not getting the answers to your questions, don't be afraid to stop the conversation and ask again.."Wait, I need to know..." or smile and make a joke of it, but persevere until you get your answer or realize you'll need to check other sources for your answers.
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    Close the Deal

    Once all the questions have been answered and you know how this will ultimately benefit your mission statement without crossing any limits, you can close the deal. Shake hands, sign the papers, and agree to the proposal. The only way to get to this point though is to ask. Go ahead and ask for the final close.

    There are appropriate times to ask for the close: when the offer is on the table, when the other side is ready to close, or when a deadline is approaching and all the negotiating goals have been met. However, it is a sales mantra to close early and often. If it is a sale you are trying to make, go ahead and try to close early. This may or may not work the first time, but it will allow the other party to start getting prepared for the deal and you will hear their objections and can respond.

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    After the negotiations, you will want to go back and review. Look over your final notes. Mentally replay the conversation, noting anything you may want to remember for next time. And finally, do everything in your power to be sure the agreement is carried out in a timely manner. The steps to being a successful negotiator will serve you well in all areas of your life. Take the time to do the work up front and that will help smooth the path for your small business.