Negotiation tactics are skills learned over time
We can’t expect to be good negotiators straight away. Besides that it is easier to negotiate on behalf of somebody than negotiating for personal benefits.
Negotiating for personal benefit will result an emotional game played between a Vendor and a Purchaser. This is why there are significant differences in outcome when using a Business Broker on your behalf; emotion is replaced with being charismatic and the Purchaser couldn’t play the emotional tactics so useful in a Vendor- purchaser 1-on-1.
In a negotiation process there is nothing wrong with asking, and there is nothing wrong with wanting. As long as you don’t expect to get everything you asked for you could be surprised with the result.
Follow these rules and, with some practice, you too could master the negotiation process:
1. Think of the long-term mutual gain instead of the short-time personal gain.
A win-win negotiation means a shared benefit. Forget about your own personal gain and concentrate on what will make both sides happy.
2. Set a trusting, cooperative tone for the meeting right from the beginning.
Win-win negotiations are built on a foundation of trust and shared respect. The ways to achieve this are to…
… state your desire to achieve mutual benefit.
… state your desire for a long-term relationship.
… insert the phrase win-win into your vocabulary.
… show proof of your honesty and willingness to serve.
3. Do your homework.
Know the answers to any question before it is asked. Don’t enter a negotiation and know nothing about what the other party desires or expects. Pre-empt any major concerns they have so they feel you understand their concerns.
4. Discuss the issues using first person plural pronouns.
First person plural pronouns (we, our, us) highlight mutual benefit and suggest teamwork.
5. Focus on interests, not positions.
Positions are what you want; interests are how you get them. When you move from the what to the why, you move from a potentially negative discussion of demands to a positive discussion of common needs.
6. Increase the numbers of issues you negotiate.
You increase the chance for win-win outcomes by increasing the amount of matters you can resolve. Make it so both of you gain something of value.
7. Avoid ultimatums.
A take-it-or-leave-it attitude creates pressure and limits options. Don’t put yourself or the other person into a corner. That would make it a win-lose scenario.
8. Give to get.
Show your willingness to give and take as long as the other party is willing to do the same.
9. Don’t get caught up in the emotion of the negotiation.
Maintain your composure and objectivity. If you become angry, you lose.
10. Engage in creative problem solving.
The problem you and the other party are trying to solve can be stated very simply: How can we arrive at a deal that maximizes our individual benefits, minimizes our individual losses and is fair for both? Brainstorm all possible alternatives that achieve all three criteria. Choose the alternative both can live with.
11. Keep searching for ways to add value.
Leave out no possibility to find ways to increase the value of what the other person wants… while keeping what you want.
12. Make concessions gradually and in increments.
Small incremental moves are better than one sudden, large and drastic move during the course of the negotiations. Smaller compromises are less threatening and easier to obtain.
13. Document all agreements.
Avoid any possibility of a misunderstanding that would blow the whole deal. That would create a lose-lose scenario, and you will have wasted each other’s time.
At the end of the day, once we work together we would have a willing Vendor and a willing Purchaser. It doesn’t matter how low the first offer is, as long as the Purchaser is willing to put the offer in writing. It is our job to get the best possible outcome at the highest possible price. A business broker will not be drawn into emotional mind games and keep you on track, ensuring a smooth transition.
Some strategies will confuse buyer and/or seller, this is where you need to have faith in the fiduciary relationship between Business Broker and Vendor. All actions have a purpose to bring both parties closer.
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