February 10, 2014

Striking a Deal: Tips For Effective Negotiation

By Mike Schmidt, John Deere Construction & Forestry

When we think of negotiation, we might think of it as something lawyers, politicians and athletes' agents do. However, being able to negotiate is an important skill in any business situation, and even in everyday life. We spend much of our time negotiating whether we know it or not.

Becoming an effective negotiator will help you in a variety of ways. It will help you strike business deals that are mutually beneficial for you and your customers, vendors, or business partners. It will help you build better personal and professional relationships that are based on mutual understanding. Most importantly, it will help you to be more successful in business.

You might think that negotiation is an innate skill that some possess and others do not. Or you might think that it’s something you can have others – lawyers or representatives – do for you. Or you might think you can get by on your wits. All of those perceptions are incorrect. Negotiation is a skill that you can acquire and develop with practice, and it’s something that you should become proficient at in order to enhance your chance at success in business.

Here are a few ways you can improve your negotiation skills:

Be prepared
A successful negotiation starts with a firm understanding of the other party's interests. Take some time to think about their priorities and what they want to accomplish. Having this understanding will give you a better idea of what you can propose and what they are likely to accept. That makes it easier to find common ground.

Set objectives
You should also have a clear sense of what you want to achieve and know your minimum and maximum range is. It may sound obvious, but too often people enter a negotiation without really thinking about what they want and why it is important. Also think about your alternatives, because negotiations do not always go as planned.

Price is not always the issue
A common misconception about negotiation is that price is always the most important issue. Often, price is a lower priority than you might think. There are many other issues that are part of a negotiation – volume, quality, and timeliness to name a few. If you are prepared and know what you have to offer, you might find your counterpart has some flexibility on price.

Don't think in terms of winning and losing
Another misconception about negotiation is that there is a "winner" and a "loser." In fact, neither party should feel dissatisfied. A truly successful negotiation builds a relationship for both short- and long-term, as the needs of both parties are met in a mutually beneficial solution.

Be calm, cool and confident
Your demeanor might be the most important thing you bring into any negotiation. If you bring a positive tone and are confident in your position, your counterpart will get the idea that you are sincere and trustworthy. However, if you are overly aggressive and adversarial, or if you're timid and unconfident, the negotiation will not end well.

Get some training
Negotiation is a skill that can be learned, practiced and improved. Look for opportunities to improve your abilities through training offered by consultants or through your local business groups like the Rotary Club or Chamber of Commerce. Be patient. The more you learn and practice, the better you will become over time.