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The power of negotiation

Does negotiating make you nervous? Here are some tips to help.

It never fails to amaze me in business the number of people and organisations that accept the initial offer a supplier has put forward to them. Are people scared of negotiating?

Is it seen as a faux pas or a dirty habit? I’m not saying you should act like you’re negotiating in a street market, but you should at least open up a discussion.

I’ve heard several times that you can’t negotiate with suppliers as it doesn’t meet probity requirements, but this isn’t the case at all. As long as you treat all the negotiations in the same professional manner and keep records as to what was discussed and what was agreed, it’s perfectly acceptable to negotiate.

Another good way to drive costs down while ensuring probity is to run an e-auction. This way, all the suppliers will be treated in the same manner as they compete against each other to reduce costs.

If you’re not restricted by public sector probity then the world of negotiation is your oyster.

Here’s an easy step-by-step guide to negotiating:

1. Ask yourself what type of negotiation it is. There are 3 types: a one off negotiation, a negotiation that will be repeated in the future, and a negotiation where you’re looking to form a long-term relationship. Each should be treated in a different way. For example, you can afford to be more assertive with a one-off negotiation.

2. Remember the meaning of the negotiation. There are two main reasons to enter into a negotiation. The first is due to necessity, and the second is to seek out an opportunity. Remember, the power to walk away from a deal is a very strong tool to have.

3. Have the facts with you. Do some benchmarking: shop around a little, research the market rates for this product or service.

4. Do not give a range. If you tell the salesperson you’ll be happy to accept between 5-10 percent, then he knows he only has to offer you the 5 percent.

5. Don’t lie. If you get caught you’ll lose all credibility.

6. Be prepared to make strategic concessions. You may have to lose a battle to win the war. For instance, can you give away some lead time to get the price you want.

7. Read the other person’s body language. You don’t have to have a PhD in body language to see how comfortable the other person is with your requests. Remember ‘The Flinch’ – a good salesperson will be trained to flinch when you put a proposal forward, but don’t let this put you on the back foot and make you think you’re asking for too much. Remember you’ve done your research and know the facts!

8. Remember this isn’t personal, it’s just business. Negotiation is part and parcel of business life.

James Williams
James Williams is a Procurement Specialist and Partner of Optimus Business Solutions in Canberra. Optimus Business Solutions are a boutique business consultancy that specialise in growing the profit for SME’s through procurement, management accountancy and data analysis.