Business Negotiation Strategies: Everything You Need to Know
Business negotiation strategies are key for business, whether you are a big company’s CEO or a small business’s owner.3 min read
Business negotiation strategies are key for business, whether you are a big company’s CEO or a small business’s owner. These strategies apply to a range of business activities from the small, like scheduling, to the large, like big contract negotiations with an important client.
But the size of the negotiation should NOT dictate how much effort and/or preparation you put in. Instead, you should approach all negotiations in the same way. They all require two or more people coming to a single agreement. The art of negotiation is almost always required to get to that final outcome regardless of size.
The desired outcome of your negotiation also should not guide how much you prepare or how you approach your negotiations. Success is not measured by how close the deal came to what you wanted, but rather the process by which you got there. If, through creative and skillful negotiations, you were able to get all parties a fair contract, that’s a success. Sometimes this is more difficult and impressive than getting everything that you wanted.
Even the lack of an agreement may be considered a success post-negotiation. Sometimes the best outcome is for both sides to decide that doing business is not the right decision for the parties at that time.
Two Strategies: Competitive v. Collaborative
The competitive strategy is all about winning while the collaborative strategy is more about compromise. The more flexible you can be, the better, because that will put the other parties at the table at ease and allow for several different proposals to be considered. This will impress your negotiatees and your own negotiating team.
You should use the collaborative strategy to consider unique arrangements to bridge the gaps between all the parties’ most desired outcomes. Try brainstorming and creative problem solving in order to come up with unexpected answers to difficult problems rather than rejecting answers that seem unfavorable. By offering or accepting to “do X,” the other party may be more inclined to agree to “do Y.”
Renegotiation After Agreeing/Signing
If you have signed a lopsided contract or agreed to terms you didn’t fully understand, you do not have to live with the deal. If it is hurting you or your business, you can address the issues with the other party. Most people will be fair and willing to reopen negotiation before the end of the contract period.
This is especially true if you present clear evidence of the disadvantages you are facing due to the contract. The desire and contractual requirement for a good faith negotiation may allow for changes to be made.
You can also agree to a shorter contract term. This would allow for an earlier review of contract terms and renegotiation.
Being prepared is the most important thing you can do in business negotiations. Here is a list of research and preparation that may help:
- Reviewing and understanding the business of the party you are contracting with, including:
- Their website
- Their press releases
- Articles written about or by the party
- Searching Google and LinkedIn for the party (company)
- Reviewing the background of the person you are negotiating with, including:
- Any bio on the company’s site
- The person’s LinkedIn profile
- Doing a Web search
- The person’s history of negotiations
- Reviewing similar agreements and the terms that have been completed by the party
- For public companies, some of their prior agreements may be filed with the SEC, so they should be easy to find.
- Understanding pricings from competitors of the party you are negotiating with.
- Talking to business associates who have dealt with this person or party before.
- Many negotiators develop patterns and certain styles that you may be able to use to your advantage.
Prepare for Disputes in Your Contract
When signing anything, assume that a dispute is inevitable so that you can best prepare for it and protect yourself. Negotiate for an added contract clause that requires renegotiation, mediation, or arbitration in the event of a disagreement instead of litigation, as it will save you future legal troubles.
If you need help with business negotiation strategies, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.