Negotiating in Business — Everything You Should Know

Negotiating in business involves give and take. Each party tries to persuade the other one to agree with their point of view. It may seem frightening but it is important to grow your business. 

In this article, we will talk about what negotiating in business is all about. We will tell you the phases and tactics you can use in negotiation. We will also tell you the different styles and some skills that you must have to become a master negotiator. 

Once you are done reading this article, you will have a better knowledge of negotiating in business. Thus, allowing you to effectively negotiate every deal. 

What Does Negotiating in Business Mean?

Negotiating in business refers to a strategic discussion between parties to resolve an issue that is acceptable for both parties. In negotiation, all parties avoid arguing but agree to meet halfway. Thus, making a compromise for a deal to happen. 

One party puts its position forward while the other will either accept or counter the position. The negotiation process continues until both parties agree or one walks away from the negotiation table. 

You must take note that negotiation has three possible outcomes which are:

• Win-Win negotiation

• Win-Lose negotiation

• Inefficient but all items are shared equally by the parties

Many people are scared to negotiate, which is why they assume that prices and offers that are presented to them are final. However, it is not true and many are actually flexible. Negotiating can be a way to come to agreements in a variety of areas. Some examples are:

• Reducing the sale price
• Improving the conditions of a contract
• Getting a better offer or deal

Key Elements in Negotiation

In negotiation, there are key elements that play a huge role in your negotiation if it will be a success:

1. The parties in the negotiation

This element of negotiation asks who are the parties involved and their interest in the negotiation. By knowing who are the parties in the negotiation, you will know your position and their background to perfectly initiate the negotiation.

2. Relationship of the parties

The relationship between the parties is an important part of the negotiation. You should know how your connection with them will play a part in the negotiation process. 

Of course, a well-founded relationship with the other party is likely to have the best possible outcome in the negotiation.

3. Communication

You should know how to best communicate your needs and position to secure agreements in the negotiation. You should also know the most effective way to convey the desired outcomes of the negotiation without the other party getting the shorter end of the stick. 

4. Alternatives in the negotiation

Alternatives in negotiation are very important. You should have a strong BATNA if a direct agreement is not possible. You must be able to find a substitute to reach a concession. 

5. Commitment

The commitment of both parties in the negotiation is very important. The right amount of commitment given by both parties will deliver a good outcome in the negotiation. In this key element, the efforts of the party will be discussed to achieve the negotiated results. 

The 4 Phases of Negotiation

Negotiation follows a cycle. It has four phases that dictate how negotiation runs. Each phase or stage coincides with the other. Thus, it is important to know about these phases. 

Below are the phases in negotiation:

1. Preparation

Everyone knows that you should always prepare for whatever you are going to deal with. Negotiating in business without preparation is like bringing a knife to a gunfight. 

The most important part of preparation is to collect information as much as you can. Every negotiation process starts with preparation and only through preparation can you make and execute your strategy for the negotiation.

2. Information exchange and bargaining

The second step is knowing how to open the negotiation the right way and having the right content-related skills in negotiation. The most important skill you should have in negotiation is financial expertise.

Having financial expertise will help you create a deal that fits your strategic goals. Knowing the unit economics of your business will help you understand whether you should focus on low prices or fast delivery time. Additionally, financial skills will allow you to use your BATNA better.

3. Conclusion of the agreement

This phase is where both parties finally reach an agreement. You must take note that it is important to follow up on whether the other party can commit to what you have discussed in the negotiation.

4. Execution of the agreement

The final part of the negotiation is the execution of the agreement. This is where all the deals in the agreement are executed and carried out. 

The negotiation phase is an integral part of procuring your company’s needs. Thus, if you know nothing about it, then you cannot start the negotiation effectively. Just click here to know more about the negotiation phase.