How to Eliminate Chaos in Your Business
The Art of Business Negotiations
You may say, “I don’t like to negotiate.” You may think you only need to negotiate over large issues. That’s not the case. Do you realize you negotiate every day?
Even something simple, like discussing who will do the dishes, is negotiating.
In business, the money you make during negotiations might be the most money you have ever made. Let’s say you’re negotiating a contract from a supplier. Say you were able to knock $1,700.00 off the price. It took you a whole hour of negotiating. Do you realize you just made $1,700.00 per hour? Where can you spend an hour and make $1,700.00?
Some tips you should keep in mind when negotiating:
Never Accept The First offer:
You are negotiating with a supplier for an extra discount because you have a high turnover rate for his products. You were expecting a 2.5% discount, but the supplier offers you a 5% discount. You would still say to the supplier, “You’ll have to do better than that,” or “Your offer is not acceptable.”
If you accepted the first offer, which is more than you anticipated, then the supplier will immediately think, “I could have gotten away with a smaller percentage,” or “This customer needs me more than I thought.” So never, under any circumstances, accept the first offer.
Always Be Prepared:
The more information you can get before the negotiation, the better. When you have this information, you can play “What if?”
Example: You are negotiating a supplier discount. You got some inside information that you are one of the top five customers. You also know the supplier needs your account. You want an extra 5% discount, a 30-day return policy, same day delivery and 90 days credit. Here is how I would use the “What if?”
The supplier offers 2.5%, a 15-day return policy, next day delivery and 30 days credit. Then you would counter at 4%.
You go along with the next day delivery because you make my orders late in the day anyway.
You must have the 30-day return policy.
You will go with 60 days credit.
The more “What if ‘s?” you create before the negotiation, the better prepared you will be. I would play a “What if?” with the absolute minimum I’m willing to accept for the negotiation to be profitable. Then anything which I can negotiate above that will be acceptable.
Get the Other Party to Take a Stand:
When negotiating, find out what the other party wants. Say you’re buying a car. Would you make an offer without knowing the asking price for the car? The same applies when dealing with a problem. Find out what the other party wants before attempting to resolve the situation.
You have a dry cleaning business, and a customer’s suit was ruined while being dry cleaned at your store. You may offer free dry cleaning for one year or a new suit.
You are trying to resolve the situation, without first knowing what the customer wants. The proper way to approach this situation is to ask the customer, “What would you like us to do?” You don’t have to give them what they want, but know what they want before you give away the store. Once you know what the customer wants, you can resolve the problem more quickly and accurately.
Answer Questions With Questions:
If the other person is trying to corner you, always answer his question with another question.
You are negotiating the price of a car. The purchaser asks, “Would you be willing to take $4,000.00 for the car?” You could reply, “If I were to take $4,000.00, would you pay me now?”
Always Confirm at the End of Negotiations:
At the end of the negotiations, you should always confirm the agreement. This will save you a lot of headaches, and everything will be clear to both parties.
“Let me see if I understand correctly. The price of the car is $15,000. I will give you a deposit of $500. You will replace four new tires and install a new battery. I will pay you the balance of $14,500.00 by certified check on Saturday. Is that correct?”
Writing it on a piece of paper, with each receiving a copy, is even better confirmation. That will eliminate the “I didn’t say that” excuse.
Always Ask for Something in Return:
When you are asked for something during a negotiation, you should always ask for something in return. This will eliminate further claims and add value to the request.
You are selling a car, and the purchaser asks, “Could you hold the car for two weeks, so I can get my money together?” You should reply, “If I hold the car for two weeks, can you give me a deposit of $1,000 instead of $500?”
If you answered, “Sure, no problem,” then the person might ask you for something else. But asking for something in return will make the other person hesitant to ask for something else.