In my experience, the mere mention of “negotiation” brings about one of two reactions in people. Some grin with glee, excited to leap into discussions and meet their competitor on the battlefield.
Others grimace with anxiety, shaking their head as if to say “No. Not me. Please—not me.”
No matter which camp you’re in, the common truth is that in order to secure the best possible deals for your business, you’re going to have to negotiate. Whether you’re looking to sign a multi-million dollar contract, or bring on board your very first client, negotiation doesn’t have to be stressful or complicated.
Make use of these five essential elements, and you’ll be able to easily and successfully handle your negotiation.
Essential #1: Preparation
Nothing screams amateur hour like winging it in a negotiation. It’s worth taking the time and making the effort to research and create a strategy (and a few backup plans) before shaking hands and sitting down at the table with your counterpart.
Your first task is to build a team to support you. Bring on board members of the different departments impacted by the deal (legal, finance, operations, quality) and get their take on where you are now, and where you should be headed.
If you’re a small organization, think of this team as a circle of counselors, and explore your broader professional network to find engaged, savvy individuals to lend a hand. This group will be your core guidance through the prep work, as well as your go-to advisors for roadblocks that arise during your negotiations.
Your second task in preparing for your negotiation is to establish your goals and priorities. Like it or not, you’re not going to be able to get absolutely everything you want, so understanding what you must have, and what you can live without is crucial. Having this clarity will allow you to remain on track during the negotiation process; you’ll be able to explore all of the avenues, but always know what your desired destination is.
Essential #2: Relationships
Once your strategy and supportive crew have been established, it’s time to start the negotiations.
As you’re driving discussions toward your goals, it’s easy to get caught up in the tactical side of things, and start considering the negotiation as being “just” about the contract or deal at hand. Resist the impulse—negotiators are people too. You’re just one person, asking another person to help you achieve your goal.
However, doing that without a strong relationship is going to be nearly impossible. It doesn’t take grand gestures or massive sweet-talking to build strong relationships during a negotiation. It can be as simple as making time for small talk, asking questions about the other person’s business and life, and—this is key—actually caring about the replies. Remember that they love golf, or spend Friday nights jamming with a Stones cover band. Treat this relationship building just as you would getting to know a new friend.
Essential #3: Creativity
Negotiating contracts seems like a pretty dry, boring activity—and it can be, if you’re not tapping into your creative side. There’s more than one way to crack a nut, and the same goes for business deals of any size.
Think of the negotiation as a puzzle that you and your counterpart are trying to solve together, and the best part of this puzzle is that there’s not just one solution—the possibilities are endless.
The preparation and priority setting you’ve done in Essential #1 means that you’ve created flexibility for yourself. The more variables you have in play, and the broader your range of acceptable outcomes for each, the greater the number of configurations your solution could take.
If you’re hitting a roadblock during your discussions, a great way to break through it is to open up the floor to a no-holds-barred brainstorming session. Set the expectation that nothing heading onto the flipchart or whiteboard is “on the record,” and allow yourselves to play with the question, “What could this deal look like?”
When you’ve built strong relationships, an exercise like this can work magic to get your creative problem-solving juices flowing again.
Essential #4: Patience
Perhaps even more than the other negotiation fundamentals, forgoing patience in your negotiations can create major damage to your end deal.
The process takes time. We can have all of the deadlines (real and imagined) that we want, but at the end of the day, you can’t rush through. There will be missteps, re-dos, backtracking and abandoned solutions that you were so sure were “the one.” It’s frustrating, but don’t let that feeling drive you to throw in the towel and settle for whatever happens to be on offer.
Patience also means learning to get comfortable with the discomfort of negotiating. Even the pros can feel uncomfortable from time to time, and it’s human nature to want to flee, to escape this situation and environment as quickly as possible. Giving up too early in your negotiation may get you some short-term relief, but it’ll also pretty much guarantee you a poor result.
A shaky contract, poorly defined ownership language or margins that aren’t sustainable will be pain points you’ll deal with for years to come. Patience, when added to your creativity and collaborative spirit is how you’ll get through.
Essential #5: Feedback
Congratulations! The deal is done, the ink is dry, the champagne popped, and you’ve wrapped up negotiations. On to the next one—right?
Not so fast.
To grow your business, continuous improvement is a must. Each deal, contract or partnership needs to be better than the last if possible, and each negotiation process smoother and more enjoyable for everyone involved. It’s essential to put on a scientific mindset and perform a negotiation post-mortem, taking a good look at what worked and what didn’t. Pull together your negotiation team and review both the process and results.
For example: What went well, and where did you hit snags or misunderstandings with your counterpart? How could those situations have been handled differently? Dissecting the final agreement, does it match the priorities and goals you’d set at the beginning? If you had a chance, what would you change?
It can be especially helpful to go through this review a second time a few months after the negotiation closes, to see how your creative solutions are working in practice, rather than in theory.
Keep track of these findings and corrective actions, and share them with your negotiation team and your colleagues, so that when you’re diving into the next one, these answers fold themselves seamlessly into your preparation.
Negotiation may never be easy, but it’s definitely possible to achieve great results by focusing on the essentials. Just as your business has been built with layer upon layer of incremental improvements, these five negotiation essentials help you construct a strong foundation of clear goals and boundaries, and then work your own brand of magic from there.
You’ll foster strong relationships, explore and leverage your creativity, test your patience, and come full circle—using all of your lessons learned to make your next negotiation even stronger.
Which of these negotiation essentials have you been practicing in your business? Which could use a bit more attention?
My challenge to you—whether you’re a negotiation enthusiast or a reluctant deal-maker—is to use this framework in your next discussion, and let us know how it goes!