Ten Steps to Better Negotiation Skills
How can you improve your chances of getting your own way at the right price in franchising?
A recent blog revealed that franchisees were expecting to take longer for their franchise to break even. You can earn a return from almost anything if one lets long-term inflation take care of the detail. However, negotiating a better purchase price brings the break-even point a lot sooner. Everyone can benefit from improved negotiating skills. In this economy, franchisees should negotiate better pricing with local suppliers and landlords to help their businesses.
Actually, negotiation isn’t about clever sales tricks, but key principles which will stand you in good stead no matter what you’re bartering over.
We have distilled the advice of a number of experts into 10 top tips:
Share personal information
You may be inclined to believe you should approach negotiations in a guarded manner, keeping your cards close to your chest with a poker face. This can be a smart approach in poker, but inhibits trust where you intend having a longer term relationship. If you want to be trusted, you must first offer it.
You don’t have to put all of your cards on the table at the outset, but studies have shown that revealing some information improves the outcome. So put something of yourself out there – your hobbies, personal concerns, or hopes – and set a positive tone that’s conducive to gaining agreement.
Preparation is everything
The first step is to understand the party you’re negotiating with, where their priorities lie and to formulate your own priorities. Rank your priorities and leave them on the table for all to see. That enables a meaningful comparison and makes it easier to trade off.
Part of your preparation is being clear on your walkaway price, as well as your target price that you’re hoping for. Don’t get into gamblers remorse (or
auction remorse) where you follow a moving target because you decide you simply have to win. There isn’t a winner and loser – all there is, is a price at which a business is viable. Do your research on firm data.
Listen and tailor your response
Listening is an underrated skill in today’s world. Many of us tend to assume we know what others are saying, or even finish what others are trying to say.
Listening causes the other party to feel respected, builds trust, and of course establishes what was actually said.
From the outset, try ask the other party what they want to get out of the negotiation. Get your partner to show his cards, as you have already done. Figure him out, and what buttons you can push.
After Donald Trump won the presidential election, international newspapers showed photos of him having his first meeting Barack Obama, with Trump looking like a contrite schoolboy. We reveal as much as 55% of what’s going on in our head through our body language. You need to adopt the right mental approach, so your body language follows suit. Decide on the value proposition of what you’re offering, and know it helps the other party.
Take some time out
Don’t be afraid to ask for a break in negotiations to collect your thoughts.
Make the first offer
This piece of advice appears to defy conventional wisdom. But research is clear on this point: people who put the first number on the table set the figure around which both parties begin to work. It sets the stage.
Don’t counter too low
If you aren’t able to make the first offer, or set the stage, then you need to counter the opening offer. Caution: most people go too low, too quickly. Before you enter negotiations, form three positions in your head: what you could get away with – which is usually your opening bid; what you expect to get, based on a knowledge of your market; and your deal breakers.
Get to know their walkaway position
One of the biggest mistakes negotiators make is failing to discover their opponent’s position. So if you’re selling, for instance, ask a potential customer what they are willing to pay. Once they have told you what they are willing to pay, you have two positions and there is scope for negotiation.
Seek a Win-Win Outcome
Negotiation should be a discussion of how to achieve a mutually agreeable outcome – it is not a selling exercise. If it’s your product or service on the table, the objective is trying not to move on price. Think of what can you agree on so they still buy at the original price. Every buyer wants to feel that they got a good deal; every seller wants to feel as if they drove a hard bargain. Negotiation needs to be win-win, especially if you’re going to have an ongoing relationship with the other party.