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How Not to "Give Away the Store"
by Wendy Priesnitz
Q: I think my small business just got had by a new client. Well, maybe I just didn't do a very good job of standing up for myself. A company wanted me to supply them with some product at a really low price. They promised me that they'd buy a huge amount over the course of six months and although I was skeptical, I couldn't find a way to turn them down. So I gave them a discount that is larger than I've ever given. I even waived my usual credit procedures! How can I deal with this sort of situation better in the future?
A: There are many techniques for effective small business negotiating. The most important thing - as you've just learned - is to stay in control of the situation. And you do that by being prepared.
By preparing, I don't mean that you should outline a perfect scenario, but that you should know your bottom line position. Study the other party's interests, as well as the best possible alternatives to your perfect scenario. You should also understand the short and the long term consequences of the various scenarios. And you accomplish this by doing your homework.
Fairness is also important. If people feel a process is fair, they are more likely to make real commitments and less likely to walk away or plot ways to get out of the agreement.
Communication is another aspect of effective negotiations. So cultivate active listening skills. Focus on what the other party is saying, both on their words and on their underlying meaning. This will help you understand the interests upon which agreement can be based. And it may make the other party more prepared to listen, not to mention increase their level of respect for you.
Finally, know your bottom line. And don't be afraid to walk away from the negotiation if the other party wont come half way. Be conscious of the importance of the relationship. If you understand the relative priority of the relationship, it can be easier to know when giving on a particular point may yield short term costs but long term gains.
Oh, and get those promises in writing.
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