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Tuesday, November 21, 2006

Real Life Negotiation Skills

In a society where the common consumer doesn’t negotiate anything, life for an entrepreneur is full of negotiation. When was the last time you walked into Starbucks and told the barista that you thought $3.30 was too much for a latte, but you’d be willing to pay $2.75? I think the world might stop spinning on it’s axis and we’d all fly off the earth into space if we actually tried this. In business, however, everything is negotiable. The rub occurs when people apply societal norms from consumer life into business life.

If you understand a few basic concepts about negotiation, everything you buy, sell, use or throw away is negotiable.

Negotiating is the process of identifying goals and interests among two (or more) parties and creating mutually beneficial solutions.

Good negotiators:
  1. Account for their counterpart’s interests and perspectives. If you approach negotiation not from the standpoint of what do I want, but from the perspective of what do they want, you will be on your way to fulfilling both.
  2. Use knowledge of their counterpart’s interests and perspectives to improve communication and the quality of the proposals they make. If they want cash upfront, offer to pay upfront for a discount. If they want a particular timeline, offer to meet it for an increased price.
  3. Understand yourself and what you want out of the process. You should be outward focused, but at some point you have to make sure your needs are being met.
  4. Achieve an objective perspective that allows them to overcome hurdles during the negotiating process. You can’t take negotiation personal. It’s not a subjective process. If you let your feelings get hurt by a “low ball” bid from a client, don’t take it that they value your business poorly. Keep focused on the end result – the objective of what you are trying to accomplish.
  5. Shares information. Don’t hold all of your cards close and in secret. If you reach an impasse because the client doesn’t want to pay what you’re asking, explain to them what your prices are, what your desired profitability is and this is why you can’t lower your prices anymore. It feels like a risk, but there is nothing wrong with being transparent in today’s culture.
I encourage you to try this the next time you negotiate anything. Whether a business deal with a client, time on the golf course with your spouse, or bed time with a child, it will make a difference.

Now to lighten things up a bit, here’s the best example of negotiation in any movie I’ve ever seen.