by Guest Blogger Michael Harrison
Studies show that the order in which we absorb information often determines the value assigned to that information. When conducting business, people tend to assign more weight, more value, to the first information they hear, and give subsequent information less attention.
The bar is set. That initial price, “put out there” during negotiations, is now the bar – the point from which both sides now negotiate better terms and conditions. Negotiations are always anchored to the numbers and contractual terms set out during the initial stages of negotiation. Otherwise, the negotiations would stop, right?
In small business development, it’s common to negotiate everything from terms of the office lease to price points to improve margins on raw materials.
You can save your business money during negotiations. How? Never set the initial terms upon which negotiations take place. If you deliver a project estimate first, the prospective client works with those numbers, and is now controlling the negotiations – obviously something to avoid.
You want to control the flow of negotiations, and in many cases, the way to do that is to say nothing.
Don’t blink. Once negotiations have begun, listen. Don’t offer more information than asked to provide. Of course, be gracious and cordial – a true professional – but a poker face at the negotiating table is an invaluable asset.
When the people on the other side of the table provide numbers, terms, conditions, and other points of negotiation, you now have a tremendous advantage. You know what the other side wants, what it needs (more or less), and you have a list of priorities set by the other team.
Don’t counter. In fact, if you look a little disappointed at the proposal, and stay silent, something remarkable often happens. The other side sweetens the pot by offering better terms. In fact, during negotiations, the side that speaks first is usually the side most willing to negotiate, so don’t counter. Let the other side sweeten the deal without saying a word. Now you know they’re eager to reach negotiated terms, providing leverage when you finally respond to the initial terms.
Don’t anchor yourself to a single position. You’ve done your research, examined quarterly returns, performed due diligence, and you know what will work for your company, and what won’t work.
This is the last information you want to provide the other side. It provides them with the same advantages you enjoy when they put a proposal on the table first.
Let your negotiating “partners” set the bar – the dollar figure, delivery dates, project milestones – he who speaks first sets the bar for all future negotiations. Your company is in a much stronger negotiating position if the other people don’t know where you want to set the bar.
If you stay silent on your best price, or your best terms, you’re less likely to provide those with whom you negotiate your bottom, best price, and your most beneficial terms.
Stay quiet to stay nimble.
Determine your disappointment level before undertaking negotiations. During negotiations, both parties usually walk away from the table a bit disappointed. Why? If the negotiations are successful, neither side gets everything it wants, and that means you wish you could have gotten more.
So do they.
Before undertaking negotiations, know just how disappointed you can afford to be. Create a list of absolute “must-haves” and don’t deviate from the list. Include in your list bargaining chips that you can trade for terms you actually want or need.
How low will you go? When is it time to walk away from the “deal?” Who decides where to start negotiations? Going in to the conference room, know what you can live with, and what simply won’t work. And of course, always be cordial throughout the negotiations phase of business activity.
What’s key? With any successful negotiation, preparation is essential (never enter negotiations cold), determining your business needs, and setting limits on terms – “eyes-only” information your negotiating associates never see.
When negotiating, patience is a virtue. Silence is golden.