Hone your negotiation skills
: I need to re-negotiate a contract with a vendor. Any words of wisdom? Should I hire a lawyer? — Allie
A: Good negotiation skills are vital to small business people because it is something we use every day. Whether it is asking a vendor to lower a price or getting a potential customer to sign on the 'ol dotted line, negotiations are part and parcel of small business life.
Indeed, as my brother Larry is wont to say, "Everything is negotiable."
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No, I doubt you need a lawyer to do your negotiating; not only might that be cost-prohibitive, but it would take some of the fun out of the game. If you do not see negotiating as a game, then pull up a chair for Lesson One: Don't take it too seriously, and most certainly, don't take it personally. It is just a game.
The first step then in any negotiation occurs ahead of the game: Decide what tack you will want to take. It is conventional wisdom that one should strive for a win-win outcome. In a win-win, you try and get as much of what you want while also trying to help the other guy get what he wants (or at least needs).
But as is often is the case with the conventional wisdom, it is not always right. Now, I am not saying that win-win negotiations and results are not good things; in the right circumstances, they are great. But not always.
If you have extra leverage, if you are über-competitive, if singing Kumbaya together is not your style, then don't worry about the win-win — go for it. Just know that tough win-lose negotiations often leave a bad taste in people's mouths that does not go away quickly.
OK, so once you have decided upon your strategy, then it is time to think about your tactics:
Use questions to obtain undisclosed information: When you wander onto a car lot, what is the first thing the car salesman does? He asks a series of seemingly mundane questions such as: What are you looking for and how much would you like to spend? Far from being humdrum, questions actually help the salesman craft his pitch to you.
It's a tactic any of us can use. Not only does it make you seem interested and cooperative, but it also often fosters the disclosure of useful information.
Try to avoid making the first offer: While this is negotiating 101, it is still worth remembering. And if forced to make the first offer, be outrageous: "Well, if you really want me to tell you how much I want to make, I guess $50 an hour would be great!"
Don't fall in love: When it becomes clear to the other side that you have to have something (whether it be a price, issue, or thing), you've tipped your hand and your opponent will use it against you.
Have a red herring: Having something you do not really care about and are secretly willing to give up can creates goodwill by making you seem reasonable when you do give it up.
Make unilateral concessions: As an adjunct to the rule above, a carefully crafted unilateral concession, even of a red herring, get you something in return.
Finally, consider:
The calculated blowup: Sometimes it behooves you to have people dislike you a bit, or, even better, fear you somewhat. Say that you bought a new computer system and you have had the company that installed it out to fix it two or three times. If the system malfunctions yet again, then it is time for the calculated blow up.
Call the computer company and get mad, really mad! Threaten to sue! Do not back down. They will not only try and calm you down, but more importantly, they will work to placate you. Later, you can apologize. But know this, too: They will not want to deal with you like that again and will be a bit afraid of ticking you off again. You just may get what you want because they will want to avoid another confrontation.
Today's tip: Applications are being accepted through April 6th for the Dell Small Business Excellence Award which rewards innovative uses of technology. It's a chance to win $50K and a day with Michael Dell. See details here.
Ask an Expert appears Mondays. You can e-mail Steve Strauss at: sstrauss@mrallbiz.com.And you can click here to see previous columns. Steven D. Strauss is a lawyer, author and speaker who specializes in small business and entrepreneurship. His latest book is The Small Business Bible. You can sign up for his free newsletter, "Small Business Success Secrets!" at his website —www.mrallbiz.com.
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