Leadership Challenge: Negotiation
My first job after college was working for Kohl’s Department Store. As an Assistant Buyer, I was required to take a negotiation skills class. I didn’t know it at the time, but the technique I learned in that class, BATNA negotiation, has served me well for over 25 years.
As a small business owner, you will do a lot of negotiating. Whether it’s contract negotiation, price negotiation, or working out a payment plan for clients who are delayed in paying you, it’s you as the owner who has to figure out how to get your business what it needs. That can be really tough. One of the most important success factors in negotiation is the ability to remain calm and objective so you can listen well and think clearly during your negotiation conversation. However, when it’s YOUR business, YOUR life, and YOUR ability to pay your bills, it’s really easy to get emotional. One of the reasons mediators are so good at working out negotiations is that they aren’t emotionally invested in the outcome. (They also have excellent communication and negotiation skills.)
If you’re nervous about negotiating on your own behalf, these negotiation tactics, along with the BATNA technique can help you succeed.
Prepare. In my BATNA negotiation class, the instructor passed out a worksheet we used to prepare for negotiations. I photocopied it and used it for years! On the worksheet, we supplied information similar to what I’ve listed below:
Your ideal hope for the outcome of the negotiation. (What you really want!)
What you think the other person wants.
List your main supporting facts (leverage) for why you should get what you want.
List the supporting facts or leverage you believe the other person will present.
Your BATNA. BATNA stands for Best Alternative To a Negotiated Agreement. Basically, this is what you’re willing to settle for.
When you start your negotiation meeting or call, don’t just jump in. Take a few minutes to build rapport. Some people might say the point of building rapport is to disarm the other person. I think it’s to remind you both that you’re both good people who have a job to do.
Don’t be afraid to ask what the other person wants. Sometimes, their BATNA might be a really great outcome for you! You can always reject their proposal.
Listen. It’s ok to pause before answering a question or to ask for more time to come up with an answer, so don’t feel like you have to formulate your answer while the other person is talking. You can read more about active listening in this article from Harvard.
If you’ve made a strong point, don’t be afraid to sit in silence. Most people feel the need to fill the air with words. It’s ok to make a point and then stop talking. It might feel uncomfortable, or like you’re sitting in silence forever, but I guarantee it’s probably not more than a few seconds. It will be ok.
Last, but not least, if you’re in a price negotiation and you’re the seller, that’s a signal that you haven’t done a good job educating your prospects about why your products or services are better and different. People often latch on to price when they don’t understand the benefits of what they are buying. Since price is something they do understand, it is used to compare your offering with the other option. Try putting on your marketing hat and educating your prospect about the features and benefits of the product. Be sure to think about what matters to them, not what you want to say. Make your examples specific to their business or their life.
You might never love negotiations, but with time and preparation, your negotiation skills will improve, and your business will benefit from your ability to make a good deal.