By Bill Lynott
When it comes to running a distributorship, skill in the art of negotiating can make life easier and more profitable—and failing to develop a knack in this important part of doing business can silently eat away at the foundation.
You may not think of yourself as a negotiator, but Harvard Business School Professor Michael Watkins, says you are. “Whatever your business, a good part of your time is spent negotiating,” he said. Watkins is right, of course, and nowhere is this truer than in a distribution business. Whether it’s negotiating with prospects or customers, suppliers, the landlord, or employees, it’s critically important to be in charge. Avoiding these 11 negotiating mistakes will help:
1. Not building relationships.
There may be times when you have to enter into negotiations without any understanding of the other side’s positions. But wherever possible try to establish a relationship with the other party in advance; doing so will greatly increase your negotiating power. Even seemingly unimportant “small talk” can help to establish trust while giving you some insight into how to deal with the other person.
2. Talking too much.
Negotiating professionals know that talking too much is a sure way to lose command in a negotiating session. In negotiating, silence carries a great deal of power. Most people are uncomfortable with silence and negotiating pros are well aware of that. Train yourself to get comfortable with the awkwardness of silence and use it to your negotiating advantage.
3. Not listening.
Talking over the other person or ignoring what he or she is saying makes it harder to find those areas of agreement that are essential to a successful negotiation. That said, most experts agree that good listeners are rare. “Listening is a skill that you must work on,” said Michele Tillis Lederman, author and adjunct professor at NYU’s Stern School of Business. “Listening is not a passive activity. It takes energy and concentration to focus on what people are saying and what they mean by it.”
4. Failing to understand the difference between arguing and negotiating.
In an argument, each person makes a strong and sometimes irreversible point for or against something. Under those conditions, seldom if ever is any productive conclusion reached. In contrast to that situation, the purpose of a negotiation session is for both sides to reach an agreement. Almost without exception compromises on the part of both sides are necessary.
5. Waiting for the other party to make the first offer.
Conventional wisdom has it that you should always wait for the other party to make the first offer. However, there is no research supporting the claim that waiting for the other party to make the first move is advantageous. In fact, making the first offer can be a smart move, as it can serve as an anchor influencing the other party’s counteroffer. If you do decide to make the first move, avoid making an unrealistic offer, as such a move can backfire by discouraging the other party from continuing in the negotiation. Also keep in mind that first offers are hardly ever accepted, so make sure that your offer allows room for maneuvering.
6. Not knowing your “BATNA.”
Skillful negotiation calls for careful advance consideration of other possible outcomes that may surface. That’s why it’s best to know in advance what the least is that you will agree to—i.e. the “best alternative to a negotiated agreement” (BATNA). Having a clear BATNA makes it easier to press harder during negotiations, which may help you to get a better deal than you expected.
7. Failing to control your emotions.
Entering into negotiations means that the outcome is important to you. But it shouldn’t be so important that you feel unable to walk away if the situation demands it. By keeping your emotions in check, you are less likely to enter into a bad deal.
8. Forgetting that everything is negotiable.
Negotiating pros know that everything is negotiable. Once you decide that the terms for anything are subject to change, you give yourself a strong negotiating advantage by offering a sensible, viable, and mutually beneficial alternative.
9. Failing to prepare
Even with a clear idea of what you want to accomplish in a negotiation, you still have to think about and prepare your arguments carefully. You also want to learn as much as possible about the other party. Good preparation also makes it less likely that you will forget something.
10. Failing to ask.
It may sound obvious, but it’s important to remember that the key to successful negotiations is asking for what you want. The fear of rejection or of appearing greedy can put a major dent in your negotiation success. Rejections during negotiations are going to happen—just remember that rejections aren’t personal.
11. Issuing an ultimatum.
If there is one deadly mistake that inexperienced negotiators make it is beginning the negotiations with “This is our best and last offer.” Once that’s said, there’s no room for negotiation. The other party has been put in a defensive position making it unlikely that a successful compromise can be reached. While it may become necessary to become aggressive if the other party does so and attempts to be domineering, keep in mind that the ultimate goal of a negotiating session is to reach a mutually acceptable conclusion. One solution should a deadlock be reached is setting a deadline for the conclusion of the negotiations. This gives both parties time to reexamine their positions and reopen talks with a renewed effort to reach an agreement.
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