Learning how to negotiate in business
Negotiation is part of every business, there is an art to it, and I firmly believe it is a skill any business owner can acquire. If you are a start up it can sometimes be a daunting task, but as with anything in life, practice will make perfect. Here are my top tips on how to improve business negotiation skills and what it takes to succeed.
1. Remember that negotiation always starts with passion
This is the core component of any business. If I am a supplier or a customer, I have to believe in you to believe in your business. Any business owner should be passionate about what they are doing, and this has to shine through to others. Crucially, as your business grows and you take on more staff, this passion has to be filtered through to them as well.
2. Always look to create a win-win situation
Think about your business negotiation tactics. You have to be strong when negotiating but an overly aggressive attitude isn’t necessary. This will simply negate the chances of you building a fruitful and long-lasting relationship. Going to a supplier or vendor and immediately asking for an unrealistic discount just to stamp your authority rarely works, especially for a start up. Ask for a smaller discount initially and once you have built up a good reputation, this can increase.
3. Be clear about when you will get paid
Here in Britain we are not always comfortable talking about money, but as a business owner this simply isn’t an option. Negotiating with suppliers or to win business is very important. For new businesses, having a good cashflow is often the difference between success and failure – many promising businesses have fallen by the wayside simply because they didn’t have enough cash in the bank. Although you may be keen to get orders, remember that you have your own staff and costs to pay, so negotiate realistic terms of payment as soon as you get an order. To help with this, you may wish to offer them a discount for early payment. This all depends on the needs of your individual business of course; there is no one-size-fits-all strategy.
James Caan, former Chairman of Start Up Loans