Negotiation

1. The Golden Rules

There is no single formula for successful negotiation. In one situation, you may need to tread carefully and make concessions. In another, you can be fast and aggressive.

In particular, a one-off deal is different from a series of deals with one customer or supplier.

But there are a few golden rules experienced negotiators refer back to time and time again.

1.1 Set your objectives.

For example, if you are selling, you might decide upon these four key objectives, plus several less important ones:

• Price - a price to aim for, and a lowest acceptable price.
• Volume - high volume is vital if you have spare production capacity (often the case with manufacturers).
• Timing - you need to fill quiet periods.
• Payment terms - you want fast payment, but the buyer will want to try the goods and delay payment as long as possible.

1.2 Try to understand what is really going on.

The other side will have key objectives, too.

• What can the person you are negotiating with not concede? A negotiator may not have the authority to change certain conditions.
• How urgently is your product needed?
• Is your supplier trying to clear old stock?
• What alternatives does the other side have?

1.3 Give nothing for nothing.

Avoid making a concession without getting something in return.

Stay firm, or make a trade-off:

• 'No, our product is worth our price.'
• 'Yes, we can do it. But it will cost extra.'
• 'I am willing to pay your price, if it includes delivery.'

1.4 Create a 'win-win' situation.

• Stress the benefits the other side will receive from the deal.
• Do not screw every last penny out of suppliers and customers, if you want to build a long-term relationship with them.

1.5 Write down your negotiating strategy.

• Outline your negotiating position and what you know of the other side's.
• List objectives, what is negotiable (and how far you are prepared to go) and any concessions you could make.
• Decide your negotiating tactics.