Having good negotiation skills is vital to small business people because it is something, we use every day. Whether it is asking a vendor to lower a price or getting a potential customer to sign on the dotted line, negotiations are part and parcel of small business life. Lawyers have a reputation for being good, tough negotiators precisely because they know that the whole thing is about getting the best deal possible,nothing more and nothing personal. It really is a game.
In this instalment, you will be offered a variety of tips, tricks, tactics, and strategies that will help you win the game.
Doing your homework
Before you begin any negotiation, you will need to do your homework. Not only do you need to decide which strategy you will employ, but also you need to decide which tactics, if any, you want to use to further that strategy. But beyond strategies and tactics, you first must decide what you really want out of the negotiation.
Prior to any negotiation, then, you should settle on few things:
What would be a home run? If the negotiation goes perfectly and everything breaks your way, what will the parameters of the ideal deal look like? What is your best-case scenario which means, your client will pay what you have quoted? What if the best-case scenario does not emerge, what things are more important than others, and what can you live without? What must you get as the minimum? Which issues can you compromise? What are your options, in the worst scenario?
The nice thing about prioritizing an upcoming negotiation in this manner is that it allows you to be creative and flexible.
Knowing your bottom line, and knowing what a great deal looks like, means that you will immediately know a good deal when it is offered. And more important, you will be able to see when a decent deal is on the table, even if it is not the crème de la crème (the best).
You also need to learn as much as you can about the other side, as well as any extrinsic factors that may be in play. Understanding the other side's motivations can make a huge difference.
A win-lose negotiation would result in one side trying to exploit the weakness or vulnerability of the other party. For instance, assume you need a top-end software program. A vendor pricing is Rs. 2M. The next alternative costs Rs. 1.5M. After negotiation, your vender is prepared to go down to Rs. 1.5 m as the least acceptable settlement. Any settlement between Rs 2M and Rs 1.5M therefore becomes acceptable to the software vendor. Now, you have a budget of only Rs 1.7M, and anything beyond $17,000. So, Rs 1.5M to Rs. 1.7M. You can settle for Rs 1.6M. It is a win-win negotiation.
A win-lose negotiation would result in one side trying to exploit the weakness or vulnerability of the other party. For instance, if the software vendor finds that the company desperately needs the software to implement the project and is not aware of the alternative provided by the competitor, he may not budge below $19,000. Similarly, you may try to give the vendor the impression of developing the same software in-house and try to net the software for say $14,000.
Negotiation Tactics are used in negotiations very deliberately. They can break an impasse, create a good or bad impression (there are indeed times when ithelps to have the other side be wary of you), move things along, stall, or even force a resolution.
he skilled tactician will have some at the ready before the negotiation ever begins, to be used as necessary.
The opening gambit
At the beginning of a negotiation, it is almost always smart to seem friendly, open, and reasonable. These following tactics may be helpful:
Have a friendly little chat before things get started. When you want to buy a car and wander onto a car lot, what is the first thing the car salesperson does? What kind of car are you looking for? How much do you want to spend? What is your time frame? What will the car be used for?
But far from being humdrum, these questions actually help the salesperson craft a pitch to you. It helps him or her figure out which cars to show you and what to emphasize. It's a tactic any of us can use in any negotiation, and we should because it works.
If the price of your product or service is to be negotiated, avoid making the first offer. Whenever possible, get the people on the other side to make the first offer. Ask for more than you want. Some people are so reasonable that they simply state what they want up front, forgetting that it is a negotiation. Big mistake! Of course, you will you be expected to lower your asking price (this is a negotiation, after all), but doing so shows how reasonable you are and thus creates goodwill.
Never accept your client’s first offer. You may say, “You are going to have to do better than that!” Simply be matter-of-fact about it. It could even be a joke.
Even in a win–win negotiation, you want to get the best deal possible, and you do that by asking for more and negotiating down from there. Don't act too interested. You have the liberty to take or leave the deal.
As things progress
Once begun, negotiations tend to have a life of their own. The smart negotiator will realize this and plan accordingly.
Don't fall in love with it. When it becomes clear to the other side that you are satisfied with the product or service (whether it be a price, issue, or thing), you've tipped your hand - and your opponent will use it against you. And if you do fall in love, hide it. Play it cool!
Play good cop/bad cop. We all know this old strategy. Take another person with you. Decide up front who will be the good guy and who will be the tough guy; these are roles that will be used throughout the negotiation. The value of this tactic is that, as things progress, the other side will come to trust the nice guy and dislike the bad one (or at least not want to deal with him much). The bad cop can deliver the bad news (the non-negotiable items), thereby reinforcing his bad cop image, which also serves to reinforce the good cop's image. 
Have a red herring. Having something you do not really care about and are secretly willing to give up serves two purposes. It can create goodwill by making you seem reasonable when you do give it up. It also helps you get more of what you really want because you are faking giving up something of importance.
Playpoker. Try playing poker in your negotiation: when presented with an offer, have a stone-cold poker face. Say nothing. The uncomfortable silence that ensues will be broken by whoever gets more uncomfortable first. If it is not you, you will often hear the people on the other side upping their offer, worrying that they have insulted you.
Dealing with an impasse
There are times in a negotiation when things get stuck, for whatever reason. Here are some techniques you can employ in these sorts of situations:
The ultimatum. Another negotiation tactic - and one that often creates more problems than it is worth - the ultimatum is an occasionally effective way to get what you want, especially when you think the other side may be tired or otherwise ready to buckle. But be forewarned: ultimatums get people mad, often leading the other side to employ the walkout.
The gesture of goodwill. A less confrontational way to create movement is to make a large, magnanimous gesture. Unilaterally give the other side something they really want, but explain that you are only doing so to move things along and fully expect that your generosity of spirit will be reciprocated.
Wrapping it up
As things move toward a conclusion - either with a deal or without one- there are a few last tricks that may help you get more of what you want.
Make a last-minute demand. Once you get to a point in a negotiation when the parameters of a deal have been hashed out and you are simply considering the final language, consider this tough but effective tactic: make a last-minute demand. At that point, everyone has invested substantial time and effort and wants the proposed outcome. Therefore, few people will be willing to rock the boat or scuttle the deal simply because you are making a new demand. They will probably be inclined to give it to you so as to salvage the deal.
Walk away. The willingness to walk away from the table with no deal is the single most powerful weapon you have in your negotiation toolkit. To get the best deal, you have to be willing to walk away with no deal. Your obvious willingness to do so will likely force the other side to give in more than they would like and consider concessions they want to avoid. And what if your willingness to walk does not get you the deal you want? Then walk. (You can always come back. Even that is negotiable!)
(Lionel Wijesiri is a retired company director with over 30 years’ experience in senior business management. Presently he is a business consultant, freelance newspaper columnist and a writer.)
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