This post is by Goldman Sachs as part of their sponsorship of The Huffington Post’s What Is Working: Small Businesses
Negotiation may often be described as an art form, but for small business owners, it’s an essential skill that could make or break a company. The best negotiation is one where both parties walk away feeling like they were heard and received a good outcome. Good negotiation skills grow your network, solidify your relationships with clients and vendors and pave the way for future business opportunities.
Below are seven tips that every small business owner should know as they prepare for a negotiation, according to the Goldman Sachs 10,000 Small Businesses program curriculum:
1. 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.
2. Do the research and come prepared with numbers to back up your offer. Look up the other party’s financials, study the market, and get familiar with the details of deals similar to the one you’re working on. You’ll argue more persuasively and have a stronger position if you can cite specific statistics; for example, the percentage of market share the other side can gain from accepting your terms or the number of other companies competing in the same space.
3. 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.
4. Know when you should walk away from a deal that doesn’t satisfy your goals. Set some clear boundaries before you start negotiating for what you can and cannot compromise on, and be ready to end the negotiation if these conditions aren’t met. If the other party is not able to provide a mutually beneficial offer, you’re better off politely stopping the discussion and looking elsewhere for a deal.
5. Learn about your counterparty’s past performance to better predict what their interests might be. This tactic can help make your offer seem more appealing. For example, if the other party tends to prefer multi-year agreements, consider going into the negotiation with a two-year contract that they might be more likely to sign.
6. Write down the outcomes that could make both sides happy. You might find that you have some common ground, such as in your growth plans or the price point you want to reach.
7. Look at your own company’s resources to determine how you can use them to help seal the deal. Maybe you can offer additional value like having your marketing team help boost awareness for the other side’s business or perhaps your network can provide key business connections.
What other negotiation tactics have been useful to you in the small business world? Share your advice and experiences with other HuffPost readers in the comments below, then visit www.goldmansachs.com/10000smallbusinesses for more on how the Goldman Sachs 10,000 Small Businesses program can help you grow your business.