The important fact for the moment is that you are further along and closer to your goal of becoming a successful negotiator than you believe. ONE OVERRIDING PRINCIPLE Before revealing the five basic principles of negotiating, you should learn, understand, and firmly believe in this single, overriding principle:
You already have all you need to become a successful negotiator.
All we have to do is bring them out, develop and improve them. Yes, you have much to learn and to experience. And yes you will make mistakes along the way, but the important fact is that you will learn and you will continue to learn throughout your career. The important fact for the moment is that you are further along and closer to your goal of becoming a successful negotiator than you believe. So, let’s jump right in and start bringing out, developing and improving on the skills, abilities and talents by mastering the five basic principles of negotiating. NULL BASIC PRINCIPLE #1 – PREPARE If you plan on being successful in negotiations, you’d be well advised to preplan and prepare. You must master the three basic steps of preparation. Step #1: Set Your Agenda. What exactly do you want to get out of the negotiation? Find an investor for your development? Sell a ranch property? Rent an office building? Build trust and rapport for long-term relationships? There’s always a bottom line in every negotiation. Once you determine that, you have determined your agenda. Step #2: Determine Your Position.
You can’t get where you’re going until you know where you are.
How close are you to achieving that agenda? How many steps must you take to get there? What specifically are your short-term and long-term goals? What terms must you have? What concessions are you willing to make? At what point does is it in your best interest to bail out of the negotiation? How realistic is your time frame? What are your options at the various stages of the negotiation? Here are a series of questions to help you make that determination:
What is the fair market price of the property being negotiated? What’s the other party’s position? What conditions will or can affect the negotiation? Who has the power to say “yes” to my proposal? What’s my bail out point? What negotiating style should I use?
Step #3: Understand The Other Party’s Position. It’s important to understand the other side’s point of view. Whether you agree with it or not, you have to understand it. Once you understand their way of thinking, you can tailor your presentation to meet their needs and expectations. BASIC PRINCIPLE #2 – MAKE THE INFORMATION EXCHANGE Negotiations thrive on the exchange of important information. Without that exchange, they tend to die on the vine, dry up, and blow away. Some of the information is as obvious as it is essential. Where’s the property? How much is the asking price? What are the taxes?
But there is other value in the exchange: building rapport, enhancing your image, getting a “feel” for how the negotiation is proceeding and how it will likely proceed.
The other party will be seeking the same type of information, so it’s important to “give a little to get a lot.” Keep the exchange moving by (1) asking good and pertinent questions and (2) being an active listener. Avoid closed-ended questions, those that can be answered with a single word. Ask open-ended questions, those that require more than a single word answer, to keep the conversation moving and to gather in more information. BASIC PRINCIPLE #3 – KNOW YOUR CONCESSIONS IN ADVANCE Negotiations are often all about compromise. An offer is followed by a counter offer which is followed by another counter offer until both parties agree some where in the middle ground. Go in prepared with a list of concessions you may make already in mind. When you come to a point at which you should make concessions, start with the smallest. Work your way through the list saving the biggest for last. Perceptions play a major role in all negotiations, especially when concessions are offered. A concession is meaningless if the other party does not believe that you are giving up something of real value. The concession can actually have little or no real value to you or your company, but the other side shouldn’t know that. These are called “gimmes.” Again, you give a little, but you gain a lot. BASIC PRINCIPLE #4 – CLOSE THE DEAL Buyer’s remorse sets in the moment two people or organizations conclude an agreement. Once you shake hands it’s important to formalize the agreement as soon as possible. Sign a contract or a letter of agreement or intent, but do whatever you have to do to cement the agreement in a physical document. Buyer’s remorse isn’t the only enemy. I’ve seen negotiators, especially salespeople, actually talk a client out of an agreement because they kept on “selling” after the client was sold.
When you hear “yes,” shake hands and bring out the paper, pens and notary seal.
BASIC PRINCIPLE #5 – FOLLOW UP EVERY NEGOTIATION You can complete a negotiation and then abandon the process.
Following up is essential. I recommend a two-phased follow up. One is external and one is internal.
Direct the external follow up to the person with whom you have been negotiating. You want to know that the terms of the agreement are being followed, that stipulations are being met, and that schedules are being followed. You want to know what’s working and you most certainly want to know of any problems or potential problems as quickly as possible. The internal follow up is an evaluation of the negotiation. How well did we do? How much of our agenda did we achieve? What mistakes were made? How can we do better next time? What areas of the negotiation process need our attention? What did we learn from all this? Until next time, I wish you great success in your negotiations! -Omar Periu