Best 3 Negotiating Tips
As a business lawyer I have negotiated thousands of contracts including huge deals with multinational companies, so I'm a pretty experienced negotiator. However, my toughest opponent is still my 12-year-old son. Ever since he was 3 or 4 years old, he has shown an amazing ability to be both charming and tricky to get whatever he wants, all the while also refusing to eat his vegetables or avoiding bedtime. Negotiating with him has taught me to be a stronger and more flexible negotiator in business and a more patient parent.
Negotiations is one of those things in life that most people are not good at naturally. It’s a learned skill. But anyone can get good at it if they know the right strategies. Below are the top three of my best tips for negotiating. These tips will work great for negotiating chores with a stubborn child … I mean, a business contract with a stubborn customer.
A negotiation is successful when it ends in a win-win outcome, that is, when both parties are satisfied with the result. To get to a win-win, three things are necessary. One, being well-prepared ahead of time. To me that means having all the information on my position as well as the other party’s before even starting the negotiation. Two, knowing when to talk and when to shut up. And three, letting the negotiation process take its due course.
Tip number 1:
Be Prepared. I want to know my own goals for the negotiation, what is my bottom line, what I’m willing to give up and what I’ll do if my bottom line is not met. That is, what are my alternatives if the deal doesn’t work out. This is key to having negotiation leverage. A lot of people think that the party with most leverage is the bigger, richer or more powerful party. But that’s not true at all. Power in a negotiation has nothing to do with size or wealth, but everything to do with having alternatives. not true at all. Power in a negotiation has nothing to do with size or wealth, but everything to do with having alternatives.
Think of it this way. When you’re buying a car from a dealership, you are one person negotiating against a dealership which is much bigger and has a lot more money than you. But you have the most leverage…because you have many other options - if you don’t get the deal you want from this dealership, you can go across the street to another one and buy a car there. It is having multiple options which gives you negotiation leverage because you can simply walk away if the deal doesn’t work out. So, to have more leverage, you should create more alternatives.
Equally important to knowing your own goals and alternatives is knowing the other party’s. But in addition to that it’s important to understand the other party’s underlying interests. That is, why they want to achieve their goals – what are their motives and concerns. When the other party asks for something that seems unreasonable, or refuses to accept my request, I ask them: “What are your concerns with this request?” When I understand not only what they want, but also why they want it, I can figure out how to help them reach their goals. This is what leads to a win-win result. It’s not always easy to find out what the other party’s underlying interests are. That brings me to:
Tip number 2:
Apply the 80/20 Rule. Basically it’s the principle that states that about 80% of the results come from 20% of the causes. It’s amazing how this rule works for so many different things. In the context of negotiations, the way I apply the 80/20 rule is based on the fact that we have two ears, two eyes, and only one mouth. In a negotiation, I try to use them in that proportion: 80% watch and listen, 20% talk. While I’m watching and listening, I can observe and learn all kinds of things about the other party that they will reveal through their words and behaviors. Plus one of the best benefits of this rule is that there’s less chance of saying something dumb.
So, listen more and talk less. Get comfortable with awkward silences. The other party doing most of the talking is a good thing that you can use to your advantage.
Tip number 3:
Don’t rush the process. Accept the idea that negotiations take time. A lot of people don’t enjoy the negotiation and just want to get it over with. But in my experience, contracts that get signed quickly tend to be awful. Think of the process like dating: it takes time to get to know each other. There’s going be some back and forth, and some give and take. It’s important to give it time and let it unfold naturally. If someone tries to rush you, it’s a huge red flag. They either recognize a mistake you made and want to close fast, or they see an advantage for themselves so they want to close fast. Either way, it’s a signal that they’re trying to take advantage of you. So: Slow. It. Down.
Get professional help. A business person may know what she wants to get out of a deal business-wise, but she probably doesn’t know the best way to write it. A business lawyer who works with contracts can make sure the contract is drafted the right way, to protect the client while still being fair and reasonable. Business owners often dislike contracts but understand how important they are to the business. A business lawyer can make their life a little bit easier so they can focus on growing their business.