As an entrepreneur, you are frequently tasked with making business deals, be it with suppliers, distributors, or investors. In all these situations, negotiations play a crucial role in not only securing the deal but also in detailing terms that are favourable for both parties.

However, entrepreneurs sometimes make avoidable mistakes that can cost them lucrative deals. We explore three major negotiation essentials that will greatly enhance your ability to secure successful business deals.

1. Preparation

Preparation is the most important part of any negotiation. This can make or break the deal. A well-prepared negotiator gives their investor, for instance, confidence to invest in the business.

Know your objectives: When getting ready to negotiate you need to define your goals and objectives. Here you need to determine your ideal outcome of the negotiation. However, considering things don’t always go according to plan you also need to consider what you are willing to compromise on, what is non-negotiable and your minimum acceptable outcome.

  • Understand the other party and build rapport: As an entrepreneur, you need to anticipate the other party’s demands and negotiation style before hitting the negotiation table. Doing research on the other party will also help you determine whether the deal is a good idea or not. Moreover, getting to know the other party will help negotiations go down a lot smoother.
  • Market and Competitive Analysis: an entrepreneur needs to be informed of the current market conditions, and industry trends. Knowing the prices of items at a given time for instance when preparing to negotiate with your supplier or vendor. This gives you leverage and ensures you will not be lowballed or shortchanged.
  • Hope for the best but prepare for the worst: An entrepreneur needs to be flexible and even with top-notch preparation you need to consider and brace yourself for the worst-case scenario. Chart a plan of course in case the deal falls through. Identify any conflicts that may arise during the negotiation process and craft a way to deal with them.
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2. Bargaining

    Here you need to ensure your demands are met while also ensuring the other party is satisfied.

    • Articulate your demands and expectations, avoiding jargon and complex language. State, your points, proposals and counteroffers.
    • Build a rapport with the other party to build trust and confidence. In this case, one can employ active listening, and seek clarification when necessary to ensure both parties are on the same page.
    • Pay close attention to the other party’s nonverbal cues to know how the negotiation is going. Sometimes what a client does not say might tell you more than what they are saying. For instance, if their non-verbal cues signify that they do not understand what you are saying, you may simplify your message or invite them to ask questions to clarify.
    • Frame the negotiation as a collaboration rather than a confrontation. Focus on finding mutually beneficial solutions and creating value for both parties.
    • Improvise: Adjust your strategies and proposals as needed based on the evolving dynamics of the negotiation. Flexibility shows a willingness to cooperate and can help in when at an impasse.

    3. Closing

      Closing the deal is as crucial as the preparation and bargaining stages of negotiation. You need to be aware that you can close a negotiation after reaching an agreement or without having reached one based on how the entire negotiation process goes. In the case of the former, an entrepreneur ought to make sure that all terms are clearly defined and agreed upon by both parties.

      • Summarize key points: Go through the main points of the agreement to ensure both parties understand and agree on the terms to prevent future conflicts.
      • Document the agreement: Put everything in writing, including all the agreed-upon terms and conditions, be it pricing, delivery timelines and so on. This formalizes the agreement and serves as a reference for future interactions. Moreover it can be used in legal proceedings should the need arise.
      • Confirm mutual understanding: Make sure both parties are on the same page regarding their roles, responsibilities, and expectations moving forward.
      • Establish follow-up procedures: Define the next steps and timelines for implementation to ensure the deal progresses smoothly. Organize the next meeting if there is a need for it.
      • These three steps if done well will set an entrepreneur up for success. They will significantly improve your chances of securing a business deal.
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