This week’s “Ask the Mompreneur” features an interview with Taffy Williams, Ph.D., CEO of Colonial Technology Development Co. Dr. Williams is serial entrepreneur, biotech startup expert, and has raised over $100 million of investment capital.
Ask the Mompreneur:
How can we improve our negotiation skills in the new year?
A negotiation is a process that allows parties to engage in a relationship to obtain something they need or want in exchange for something they are willing to give in return. This occurs in everyday life, not just high-stakes business deals, so we really all have experience in negotiating.
Tip #1 - Negotiating starts at your first interaction
We learn negotiating skills very early in life (e.g. promising to be good to get a new toy), and try to improve them as we age. The one piece that is not immediately recognized is that negotiations start with first contact. The parties start to develop an understanding of each other, their personalities, their likes and dislikes. They may learn something about how much a side is willing to give and how important the item or service is to that individual.
Negotiating requires development of a relationship with the other party. The better you understand the other side and their needs the better you can relate to them. Secondly, negotiations require a bit of salesmanship. The ability to communicate the positive attributes make the item or service appear more attractive and thus worth more.
You are negotiating even before your start formal discussions. What you say and do provides the other side with information about you and your product or service. By the time you’re actively trying to convince someone about the value of your offer, they may have already formed an opinion on the matter.
Tip #2 - Learn as much as possible
Learning as much as possible about the topic helps you obtain more of what you want. For example, suppose you are selling something at a garage sale. The item may have some historical value and possibly is an antique. Someone expressing interest may view it as just something old and would attach a much lower value. Your knowledge shared with the person can help demonstrate why they are offering too little for the item.
The same goes for deals in the work place. The more knowledge you have about the subject under negotiation, the better your counter arguments. Logic and reasoning can make your offer be seen as a more correct one. In short, the more you can prove your point with data, the better your chances to win the other side over to your arguments; so do your homework!
Tip #3 - Watch where you set your anchor
An anchor is a set point that sets perspective in the discussion. For example, you go to a restaurant and the menu shows a price of $250 for a bottle of wine. The next price down is $80, which by comparison looks like a good deal. The higher bottle serves as an anchor and causes you to evaluate everything else on the menu relative to that initial price.
The same is true in a negotiation. You can make an initial offer that will anchor the discussion. The key is to avoid unrealistic offers (i.e. extremes of higher or lower), may cause the deal to fall apart because the offer is not reasonable. The perception that no logical argument will bring the sides closer together can end the negotiation on the spot, so select an anchor that is advantageous to you, but fair.
Tip #4 - Do not be afraid to walk away
Win-win deals last longer, work better, and are optimal if you can achieve this as a goal. That’s why it is imperative that the parties take time to understand what constitutes a win for the other side. Be genuinely curious about the other party’s bottom line and make sure you understand their priorities for the negotiation.
However, sometimes the other side is not willing to be reasonable and has a “winner take all” strategy of negotiations. You must always be prepared to walk away from a negotiation if the deal does not work for you. You may not get what you wanted, but you do not end up with a poor deal that you will live to regret. The other side may change their tactics if they see you willing to walk away. So, always keep it as an option.
Negotiating is a natural, human process, so don’t be intimidated by it in a business setting. You can also learn more about the subject here:
Jennie Wong, Ph.D. is an executive coach, author of “Ask the Mompreneur,” and founder of the social shopping startup CartCentric.com. Email your entrepreneurship questions to TheJennieWong@gmail.com. Guest bloggers welcome.