4 Rules of Successful Negotiation

Small-business negotiations are common with vendors, employees and customers. Here's how to satisfy both parties.
Freelance Writer and editor, Self-employed
February 21, 2012

Negotiation is part of our everyday lives. We negotiate with our kids about homework, haggle with the farmers' market seller over prices and work out who will clean the dirty dishes at home. Small-business negotiations happen all the time with vendors, employees and customers.

Despite the media's portrayal of contentious negotiations (think pro sports lockout), it's possible to negotiate calmly and come to an agreement that satisfies both parties. Michael E. Sloopka, the negotiating coach, explains how to do it.

Listen

Just because you know what you want, doesn’t mean you should give it away immediately. Ask for the other side’s position first, Sloopka suggests.

“Then you know what you are dealing with,” he says. “If you are looking to buy a car and the price isn’t in the window, you ask how much the car is, you don’t tell them how much you are willing to pay for it.”

If the other party won’t reveal their position, play hardball. Tell them that you can’t give them what they want without knowing what they require, he says.

Follow the process

A successful negotiation follows a three-step process.

  • Step 1: Gather opening positions. Your son wants money to go shopping.
  • Step 2: Ask for more information What will he spend the money on?
  • Step 3: Reach a compromise.

Yeah, right. No way is it that simple.

“Actually it is,” says Sloopka. “Look for a common ground. For example, if you are buying a house, the seller states his opening position, you state yours, you ask what is included in the house, and then you find out what you and the seller can comprise on.”

But what if it gets heated? When emotions run high, you may find yourself at an impasse or deadlock. An impasse, Sloopka explains, is when more can be done but conversations have stalled. In this scenario, he recommends chatting about what each party is willing to give up in order to move forward.

A deadlock is when you’ve completely failed to reach a compromise. In that situation, it’s best to bring in a professional mediator.

Use the magic phrase

"Under what circumstance…?" This phrase can spell the beginning of the end for any negotiation. Under what circumstance would you finance my business? Under what circumstance would you close on my condo by the end of next month?

“Using this phrase is an effective way of understanding what the other side wants, and until you know that, you won’t be able to reach a compromise,” Sloopka says.

Don’t use round numbers

Imagine you find one website designer who offers to host your site for $38 per month and another that charges $40 per month. Which one are you more likely to negotiate with?

When coming to the table, offer an exact number and don’t use zeros, Sloopka says. Why? It makes you look like you’ve done the math on costs required and that fact alone can intimidate your opposing party.

The same goes with concessions. Instead of negotiating prices in round numbers (i.e. offering a product for $10,000, going down to $9,000, then $8,000, and so on), always lead with odd number amounts.

“Don’t present zeros and don’t accept zeros," Sloopka says. "It’s a dead giveaway that you don’t know what you’re doing."

Photo credit: Courtesy subject