What exactly does it mean to "negotiate" on behalf of your business? I suppose this sort of depends on what type of person you ask. There are some who seek to negotiate purely from a seat of power, while there are others who try to negotiate to a reasonable level of fairness. If you're a small business owner, then odds are you're going to run into more than your fair share of those who simply wish to squeeze every available drop of profits out of a negotiated relationship between their business and its counter-party to the deal. Since small business owners tend to start off with very little resources and a huge amount of ambition, they look like easy targets for the more nefarious of people looking to strike a deal.
Which brings me to my next point. Back when I was in the sales field, my previous manager explained negotiations to me as "if you're not capable of just flat out telling someone no thank you, and goodbye, then you're not fit to negotiate anything". As much as my former manager and I disagreed on several facets for our job, that particular phrase stuck with me. Regardless of your perspective on what it means to negotiate, that phrase will still ring true. If you haven't found your footing to be able to stand up on your own and move forward with or without this potential partner/business relationship, then you're purely at their mercy in hoping that whatever conclusion that the deal lands on would be beneficial to you and your business.
But before we can actually dive into how to negotiate, lets take a look at why you would even choose to do so in the first place. Why would a person who has the burden of responsibility that comes with running a business choose to enter into a form of relationship that will ultimately create additional responsibilities for them? In most cases, the primary driving force to entering into some form of agreement is that there is an innate opportunity for expedited, or increased revenues. Alternatively, another driving factor could be some type of relationship that could cut operational costs for both parties by utilizing the resources of the counterpart. There are numerous possible reasons to enter into an agreement or begin negotiations for establishing what that agreement may look like, but those tend to be the most commonplace.
One of the many business development topics that I cover in my consultations is training on negotiating between either person to person, or business to business. Being able to continuously produce healthy and fruitful relationships between businesses is a key component to long-term success. I'm a firm believer that you can get from point "A" to point "B" relatively quickly all on your own, but without a community or support network you probably won't reach points "X, Y, or Z". Building your business will always have a social aspect to it if you hope to have any chance at long-term success. Successful companies that have a dedicated sales department usually have an entire set of expense account completely dedicated to wining and dining their potential clients. These expense account usually come with the mindset that the salesman absolutely must use them to the fullest extent that is available to them. Why is that? Surely there are great salesmen who can close great deals for the company without needing to use an expense account or give up their social time to spend with clients. However, these successful companies force the hands of their sales force to do just that. I'd like you to ask yourself exactly why you think that is. In the grand scheme of it all, being able to form meaningful social relationships with your clients or customers is the best way to maintain those accounts.
So how and or why does this apply to the topic of understanding how to negotiate? It's a simple pragmatic concept. In any business deal that requires some level of negotiation, you absolutely must plan for tomorrow. This isn't to be taken in the literal sense, but rather in the understanding that there will be other needs that have to be met, and other opportunities which will reveal themselves over time. If you're someone who just needs to make ends meet and is only focused on transactional relationships, then maybe the art of negotiation doesn't really apply to you. However, if you're someone who can see the potential value in learning how to actively talk your way into success then take the time to consider what I'm about to lay out for you.
A good negotiator can ensure that they walk away with a good profit or some other equatable benefit. A great negotiator makes sure that each and every person involved in the deal walks away with more than the bare minimum that they were willing to leave with in good faith. So what exactly do I mean by that? Once again, this is a simple concept to say aloud, but it can be difficult for some to fully embrace. If you can walk into a negotiation and reasonably come out with 60% of the total take, then do your best to leave with just 45%. Spreading the wealth in any business deal not only helps your counter-part find greater success, but it also emboldens your network. If this is a long-term partnership or business agreement, then you're more likely to be the first person that they think of when a new profitable opportunity arises. After all, we don't seek out the people who make the best deals for themselves, we seek out those who make the best deals for all parties involved.
If you would like a more detailed explanation of tips, strategies, or just plain old examples of partnership negotiations, then check out our online course Partnerships & Negotiating Contracts.
It's just one of the many online courses offered at Budd Consolidated. Also if you think you could benefit from some personal coaching and training on negotiating, then click the button below to schedule your free discovery call with the founder of Budd Consolidated!
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