Negotiations set the stage for how successful your business can become. It determines your relationship with the people and agencies your business will work with, and can even determine your revenue. Equip yourself with sharp negotiation skills with these four tips:
Know your limit
Negotiate with the intention of getting the best outcome, but be prepared for slightly less favourable ones. Set a limit, and if your negotiations go below that limit, recognize that it might be time to walk away.
Recipient of Harvard’s Great Negotiator Award, NUS Professor Tommy Koh recounts a deal between Singapore and the US in which he made clear that “a bad agreement was worse than no agreement and that we were prepared to walk away from the negotiation if we could not agree on a fair outcome.”i The resultant US Singapore Free Trade deal has seen up to a 100% hike in goods and services trades in both countries.
The best way to determine your limit is to know your BATNA, as LadyBoss Co-Founder Liyana Stuart points out. Created by members of the Harvard Negotiation Project Roger Fisher and William Ury, BATNA stands for “Best Alternative To a Negotiated Agreement”.
For example, if you’re negotiating prices with a supplier, it’s important to know the next best option. Assess the value for money of the alternative, and make sure that the current deal you’re making outweighs it.
As prepared as you may be, the party you are negotiating with might throw you a curveball or two. Keep an open mind so you’re on top of the situation should things not go your way. Singapore Management University’s Michael Benoliel says this is especially key in Asian markets: “Do not restrain yourself by setting an inflexible deadline because time urgency in Asia is interpreted as a weakness. Even when you are under time pressure, do what Asians do: Be calm and project the allure that time is not of the essence.”ii
Justify your business valuation
First, conduct in-depth market research for a general gauge on how much your business offerings are worth. Market research aside, you may still be asked to lower or justify your pricing, whether it’s by potential investors or customers.
You can do so by comparing your product to those in the market and demonstrate how your offering is different. Point out the gap in the market and show how your product or service fills in this gap, making it worth the price tag. As entrepreneur explains, a higher price tag, within reason, can actually work in your favour.
Use your connections
This is where your networking efforts pay off. Tommy Koh recalls that when Malaysia and Singapore were in conflict over Singapore’s land reclamation, he tapped on three associates from the Malaysian delegation to reach a positive outcome.
“The fact that the four of us liked and trusted one another was a great asset. When the negotiations became acrimonious …the four of us would meet in a huddle. Several difficult issues were resolved in this way.”
Good negotiation skills ensure that your SME gets the best deals, and leaves a positive impression on any party you negotiate with. A good negotiator strives towards a win-win situation, fostering stronger partnerships in the process. If you’re looking to refine your own, or your team’s negotiation finesse, courses like SIM’s “Business Negotiation” offer government-subsidised training.