As a business owner, you’ll be responsible for making business deals that will require strategy, skill, and negotiation tactics. Being prepared for these situations can help you to make the most of each deal and keep your small business moving forward. In this post, we’re sharing ten small business negotiation tips to help you prepare for every deal, transaction, and agreement.
1. Be Prepared
This can mean different things for different business owners, but the idea is always the same. Do your homework before going into any negotiation. These are a few things you can do to prepare for your conversation.
- Get to know the other party by looking at their business’ website, reading news articles about them, looking at customer reviews of the business, and learning about their products or services.
- Get to know the individual you’ll be speaking with by looking at their bio online and doing a quick search for their LinkedIn profile.
- Look at previous deals that the other party has made, along with similar deals from that company’s competitors. This will give you a better idea of what you can expect and help ensure that you won’t sell yourself short in the deal.
2. Tailor Your Presentation to Your Audience
After learning about the individual and company you’ll be dealing with, use that information to tailor your pitch, presentation, or general conversation to them. While preparing for the negotiation, make a list of points to show how your product or service can help meet the specific needs of the other company or their customers.
3. Have a First Draft Prepared
While this document almost certainly won’t include the final terms of the agreement, but it is important for you to come to the conversation with a draft prepared. For some deals, this might mean having a lawyer create a structured document. For others, it could be as simple as you are writing out your preferred terms. If you’ve done your research, know what you’re looking for, and go into the conversation with confidence, this first draft could save both you and the other party a good amount of time in the negotiation process. Not sure where to start? There are resources available online to help.
4. Be Ready for Some Back and Forth
No matter how prepared you are and how confident you might be with your research, first draft, and expectations, it’s more than likely that you’ll need to go through some back and forth before coming to the final terms the agreement. In any negotiation, each party will want to walk away feeling like they’ve gotten the best possible deal. It would be unrealistic to believe that the other party will immediately accept your terms without trying to make it more beneficial for them.
5. Don’t Undervalue Your Company, Product, or Service
Throughout the negotiation process, it can be easy to make concessions you wouldn’t normally make, for the sake of making the deal and moving forward. This is especially true for a big deal and when working with a company you’re excited about. Don’t let that excitement cloud your vision. When you know the value of your product or service, be prepared to explain it with confidence and stand by your decision.
6. Don’t Drag it Out
While you want to be sure that you’re benefitting from the deal and not conceding too much along the way, it’s also important to not be so stubborn that the negotiation process lasts much longer than necessary. The longer the process takes, the more likely that some obstacle will through it off course. That could leave both you and the other party with nothing, after spending the time and energy in the beginning. Throughout negotiations, it’s important to be patient but also to keep things moving.
7. Keep it Professional
It’s easy to become frustrated when it feels like a deal is taking longer than necessary and you aren’t getting the resolution you’re looking for. Be careful to not let your frustration get the best of you. A bad attitude won’t help your negotiation and could potentially burn bridges for important partnerships in the future. Establishing a strong professional relationship early on will be beneficial to you and your small business going forward.
8. Don’t Accept the First Offer
Earlier, we talked about expecting some back and forth from the other party during a negotiation. This goes both ways. Experts advise that you should never accept the first offer when making a deal. By accepting too early, you could give the other party the idea that the didn’t ask for enough which could cause some hesitation and lead to them coming back asking for more. Accepting the first offer could also mean that you aren’t getting everything you want or deserve from the deal. Some countering is expected, and you should never be wary of countering the first offer.
9. Know When to Walk Away
In some cases, after some back and forth, it will become clear that a middle ground just won’t be reached. One of the most important small business negotiation tips is that sometimes, you’ll need to walk away. Being willing to walk away from a deal will show your commitment to the value your company has to offer and will show the other party that you’re serious. In some cases, the other party may come back with more reasonable terms. Other times, you may have to let that deal go and trust another, a better option will come along.
10. Have the Right Team Behind You
For small business owners, and especially for those who are just getting their company off the group, it’s important to have a trusted team of knowledgeable advisors. From other business owners with more experience to lawyers and financial advisors, these are the people who will be able to help you make big decisions that will affect the future of your business.
Strategic Capital is part of your team. Get in touch to learn about funding options and how to reach your small business goals.
Checking for pre-approval will not affect your credit score.