Negotiation is the practice of trying to reach an agreement with someone else. Negotiation involves seeking mutually acceptable terms for a deal and avoiding unfair or restrictive terms. Negotiation skills are vital in almost every aspect of business, from negotiating discounts on consumer purchases to negotiating international trade deals between nations. Additionally, negotiations occur within government agencies, political parties, professional associations, and other influencer groups. It permeates through all segments of an organization as managers, employees, and business partners engage in negotiation activities. These include buying or leasing equipment, obtaining supplies or raw materials, settling grievances between associates, negotiating over contracts with suppliers, borrowers, and lenders at every level of the firm’s hierarchy.
Types Of Negotiations And How Entrepreneurs Can Negotiate Effectively
It is common for people with natural negotiation skills to continue to improve their skills by taking courses, reading books, or practicing their skills as negotiators.
This type of negotiation involves conflict between negotiators where one person will put forward offers and demands while the other party starts by rejecting these offers until they find one that is acceptable to both parties following concessions. Distributive negotiations are used when limited resources are available, so each side must compete for what they need.
Interest-based negotiation is used where parties have different interests but are not in conflict with each other. This type of negotiation is where both parties come up with a solution that benefits and satisfies both sides and sets their differences aside. They put the problem ahead of their wants and needs to build a mutually beneficial agreement.
In this type of negotiation, one must maintain the position that they have built. They will try to hold onto what they have achieved and not give in any way. Their power, status, authority, and expertise will become their saviors. This type of negotiation is used whenever there is a similar interest but differing priorities. In the end, negotiators won’t give in to their counterparts’ demands and will instead increase pressure on them.
How To Negotiate As An Entrepreneur?
- Understand the other party’s perspective.
- Know your strengths and weaknesses.
- Be confident in what you are asking for.
- Don’t be afraid to walk away from a deal that doesn’t work for you.
- Make an offer, but don’t make it too low or too high- find the middle ground between both parties’ desires.
- Get creative with incentives if needed to help seal the deal.
Serial entrepreneur Roland Frasier, co-founder and/or principal of five different Inc. Magazine fastest-growing companies (e-commerce, e-learning, SaaS + real estate), knows that negotiation starts with your goals in mind. One of the great examples of entrepreneurs who hold comprehensive knowledge encompassing contract negotiations, financial management, and construction project management is Thomas Jakobek. Thomas Jakobek is the current president of KBNJ, a consulting service for large-scale construction projects in Canada.
As shown above, negotiation is a crucial part of success in every phase of life. Regardless of the situation, negotiating effectively is one of the most important skills a person can have. Skillfully make use of the above steps and tips and see exponential growth in your negotiation skill.