Whether you’re working with a vendor, supplier, or contractor, small business owners should know how to negotiate the best deal possible. When you fail to successfully negotiate a potentially good deal or negotiate a poor deal, the results could have a long-term negative impact on your business. Those consequences can range from financial losses to reputation damage to missed growth opportunities.
Below, we’ve listed some key negotiation techniques every small business owner should learn.
1. Position Yourself as a Solution
“One way to get a “yes” fast as a small business owner is to focus on the other side’s needs before communicating your strengths. If you truly believe that there is a good fit between you and the other party, asking them the right set of questions will drive them toward that conclusion.
For example, when we talk with potential customers about our predictive text software, we start by asking them what their use cases are and what kind of solution they are looking for. Once they describe their needs, we focus our demonstration on their use cases, making them excited about the opportunity to use our product.”
– Guy Katabi, Lightkey
2. Work Toward a Win-Win Situation
“In successful negotiations, both sides leave the bargaining table feeling like they got a win. In that sense, effective negotiators view their work as problem solving. Ask yourself: What do I want and what does my negotiating partner want that neither of us have right now? Then, propose a deal that addresses both sides’ needs and produces a better outcome.”
3. Figure Out Your Top Goals
“Figure out your top goals and rank them in order of importance. Are you looking to hire a supplier at a specific price? Tap into a new customer base? Look at your company’s short- and long-term goals, and know what matters most to you before heading into the negotiation.”
Source: Goldman Sachs
4. Keep Stakeholders Top of Mind
“When negotiating with healthcare and dental vendors, I work to get the best value I can for the sake of our patients. My most successful negotiations are those in which both sides are happy with the outcome. If we agree that, when it comes down to it, we want patients using our products and services, we can always reach a win-win end quickly.”
– Henry Babichenko, Eurodenture
5. Open the Negotiation with a Highball or Lowball Offer
“If you’re a buyer and you know what you’re willing to pay, you can start by offering half that amount. Even if you know the seller would never accept your offer, you’ve established a reference point for further negotiation. This negotiation tactic might yield a lower price than if you’d made a more reasonable offer to start. The same tactic stands if you’re the seller: Lead with a selling price that is higher than what you’re willing to accept.”
6. Know What You’re Willing to Give Up
“You can’t always have everything, so identify the areas where you can be flexible and compromise in favor of things that matter to you most. Not getting expedited deliveries might be a deal-breaker for you, or perhaps you’re willing to go a little higher on price in exchange for more favorable payment terms.”
Source: Goldman Sachs
7. Do Your Research
“There are no substitutes for knowing the ins and outs of your market when it comes to negotiations. Particularly with regard to the competition. Your prospects will shop around before closing the deal with you. Don’t doubt it for a moment.
Everyone wants quality service for the best price, but knowing your market will not only ensure you have a fair price, but you’re offering something that helps your business stand out. Know what’s happening in your industry and how changes might affect your customers. Your customer wants to know they’re working with an expert, and they’ll often pay a premium for it.”
Need Financing to Start a Relationship with a Vendor or Contractor?
If you own a small business and need to order a lot of inventory, you may need funding. Vendors may want to be paid upfront for merchandise when dealing with a new contract.
When you need financing for your small business, you should turn to First Union Lending. We have nine business loan types, so we’re certain to have the loan option to fit your needs.
Our lending experts are standing by, waiting to help find the best solution for your financial situation. Simply call 863-825-5626 or click here to get started.