Negotiation is one of the most important skills you will ever learn. It impacts on almost every part of our lives and if you develop good negotiation skills you will get better results from every deal you do, in all aspects of life. It was the very best thing I learnt at Business School and a skill I have put into practice daily, ever since.
On holiday in Austria recently, I read an excellent book called 'The Yes Book: The art of better negotiation' by Clive Rich, which I would recommend as a 'must read'. It reinforces the notion that much of life is to do with negotiation and I felt inspired to share my own experiences with anyone starting off in business and young entrepreneurs in particular, and to urge you to read this book too.
Those of you who have done formal negotiation training as I have, will recognize many of the concepts in the book. Concepts such as preparing for negotiation, finding out your opposition's walk away point, making sure that you know your own, making strategic concessions, making the first bid and so on. What was of most interest were all the examples quoted from Clive's long career as deal maker and negotiator. So it will be of interest whether you are young and inexperienced or a seasoned negotiator.
Each negotiation you make is about the successful management of three things: negotiation attitude, the process you follow and the behaviours you adopt.
Firstly attitude: it is all about being a 'fuser', working with both parties and taking into consideration both agendas. Rich warns against becoming a 'user' where you are only looking out for your own agenda, or a 'confuser' who is not quite sure of what they want to achieve. Crucially, you shouldn't see negotiation as one side wins all and the other side loses completely. The results are rarely that straightforward.
For young entrepreneurs, the process is critical. Yet, this is one area where most fall over. How you behave in a negotiation will make the difference between sealing the deal or both parties walking away from a negotiation. So remember that you need to understand what the negotiation process is going to be, prepare thoroughly, find out the needs of your partners and identify areas where you could compromise and make concessions. Once agreement is reached, close the deal quickly
Negotiation is one of the skills we have been trying to develop at the New Entrepreneurs Foundation as we believe it is a critical skill. Even our staff have benefitted enormously. I knew I had scored an own goal when one of my team declined to buy my brand new unused bicycle from me. She wasn't willing to pay the full price I was asking and realized that I wasn't clear about my motivation for selling, so wasn't desperate to get rid of it and was therefore not likely to move on the price. The result for me is that the bike is still sitting in my garage, still brand new and unused and continues to give me a guilt kick every time I lay eyes on it. That was why I wanted to get rid of it, to stop the guilt!
Children are the best negotiators in the world because they know how to manipulate their parents using a combination of bribery, persuasion and blackmail. I can't possibly compete with children at their best, but my most successful negotiation was buying a house which I purchased for 25% below the asking price. I couldn't have done that without negotiation training because I knew the buyer was desperate to sell, the house had been on the market a long time, there was very significant renovation to do, and the relationship between the buyer and estate agent was deteriorating.
The worst negotiations we make are often around consumer items like cars. Most people don't negotiate when they buy a new car so drive off the forecourt feeling proud because the garage threw in a couple of mats and a bunch of flowers. But the minute you drive off the forecourt your vehicle drops 20% in value so it is really worth taking the trouble to negotiate before you drive away. Think about clothes purchases too. Most people look at the price tag and think that's the final offer, but when you are buying clothes there are often possibilities to negotiate very successfully because retailers want a decent flow of goods and cash.
There are some situations where negotiation is obviously not going to work. Supermarkets, your bus pass and your oyster card are all included in that bracket. However, you are still left with endless possibilities for negotiating where you can hone your skills to perfection, remembering the key points which are:
1)Prepare, prepare, prepare
2)Know when you will have to walk away and be confident about doing so
3)Understand your partner's motivations, desires and pinch points
4)Don't see negotiation as a win/lose game