There is a thin line between success and failure in business. It’s not always about the effort you put into your business, how good of a product or service you create, or how well prepared you are.
The ability to reach a positive outcome in negotiations can’t be underestimated. As tech entrepreneur Brian Colpak points out, negotiations are an integral part of many interactions entrepreneurs will have with others, from manufacturers to vendors to potential partners and customers.
Here are five negotiation tips all entrepreneurs can use.
If you want to be a successful negotiator, you need to do your homework. It’s not enough to simply know what it is that you want to get out of the negotiation. You have to understand your counterpoint’s business and what they are looking to get out of it, too.
Understand the other party’s pain points, the market surrounding their business sector, and what motivates them. Knowing all of this information will give you an insight into how willing they are to budge off their initial offer.
2. Understand Your Own Position
Just as you will be doing prep work, your counterpart will probably be doing the same. They’ll be doing their own research to try to figure out what your pain points are and how desperate you might be.
That’s why Brian Colpak says it’s so important for entrepreneurs to clearly understand their own position. Knowing your weaknesses and strengths will allow you to avoid being exploited during negotiations.
3. Analyze the Initial Offer
The initial offer that is made will tell you a lot about where your opportunities will be in a negotiation. Opening offers often serve as the basis for all negotiations — with the final agreement keeping some of the main points of that initial offer.
If your counterpart makes the initial offer, you can deduce what is most important to them. Is it price? Is it consistency? Is it something else? By probing the details of the initial offer, you can identify areas where you can counter.
4. Don’t Be Emotional
The biggest mistake most entrepreneurs make is they allow emotions to drive negotiations. They bring a big ego to the table and allow their emotions to run everything. That is a recipe for failure, not success.
By checking your emotions at the door, you will enter negotiations with an open mind, which will allow you to objectively analyze the situation. This will then allow you to be flexible during negotiations.
5. Don’t Be Desperate
The worst thing entrepreneurs can do in negotiations is be desperate. When you’re desperate, you make poor decisions that can affect your bottom line for a long time to come.
Before you enter negotiations, set an absolute breaking point that you won’t go beyond. Whether that’s price, term, or some other detail, it’s important to stick to that bottom line.
If negotiations come to the point where your bottom line is crossed, simply have the guts to walk away from the table and search around.
About Brian Colpak
Brian Colpak is a tech entrepreneur and the founder of Continental Global. After spending most of his career in managerial positions, he founded and led a company that was recognized as one of the top 100 fastest growing companies in Massachusetts before starting his current company. These days his main focus is on an upcoming project in Dubai.
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