Question: In a previous column you gave some pointers on how I can beef up my negotiating skills. That was empowering. But what else do I need to know?
Answer: Today we'll look into some more basic information about negotiation, including some thoughts for having an effective strategy. There are also some tactics you need to know how to use and recognize. Let's talk about this.
Quick review of the last column:
Think of negotiating as a general life skill.
There's lots of professional training available; check the Internet.
There are five basic negotiation styles: the Avoider, Compromiser, Accommodator, Competitor and Collaborator.
Don't assume that the other party shares all your cultural values.
Let's look into four negotiation fundamentals.
1. The single best thing you can do to have a successful negotiation is this: define your goals very clearly before you go in. This keeps you focused on what matters, and less susceptible to being dragged off onto things that don't.
2. Another important negotiation issue you need to know about is information asymmetry. This is where the other party brings to the table much more and better knowledge of the situation than you do. This can be a real problem, so be careful. The absolute worst case is where you "don't know, what you don't know." The minute that you sense this, bow out, and do some research.
3. The old accepted wisdom was: always force the other party to "give the first number." The idea here was that it established your dominance in the negotiation. Problem is, if everybody did this, nothing would ever happen. The new thinking is: use "anchoring." This is where you get your number out for discussion, and then the negotiation works from there. You can choose how to work the deal from your own starting point.
4. Human nature is to assume that the other side is fair and well-intentioned. If you're dealing with someone whom you don't know, here's a suggestion: clarify this before you start. State up front that you need their agreement that you're both bargaining in good faith. If they later raise an on-the-moon point, you can say "Whoa, you said you are here in good faith...what gives?"
Here are five examples of common and legitimate negotiation tactics:
The flinch. This tactic is just what it sounds like. The moment you mention a price or other important term, the other party visibly flinches and makes an "ooh" sound as if they'd been poked with a pin.
Standard forms. This is often used in purchase contracts and other documents. The other side tells you that "our legal department prepared this for you to sign, you can't change anything."
The salami-slice tactic. This is where you're asked for a small concession, and then another and another. It's effective where it would be too obvious to grab the whole salami.
Non-verbal cues. These subtleties are a topic all their own. Google "business body language" for loads of info.
Silence. A skilled negotiator uses brief pauses and silence to best advantage. The general guideline to shoot for is: do one-third talking, two-thirds listening. And if the other party clams up, don't feel like you have to fill in.
Five devious tactics to be alert for:
Over-questioning. Of course there will be questions, but keep a balance to make sure you're not being "played" or manipulated. For example, if you're questioned repeatedly about the features of your product, you might respond: "Tell me more about what features you're looking for."
Good cop-bad cop. It's so obvious. If you sense this, get out immediately. Say, "Sorry, I can only deal with one of you, or else we're done here."
Home court advantage. If the other party insists on controlling the negotiating environment, it's a clear warning signal. Stories abound of hardball negotiators. You might end up in a small uncomfortable chair with the light in your face, while your counterpart has a tall chair behind a big desk.
Angry bluster. You may be subjected to a fake outburst in an attempt to throw you off guard.
Bogus limited authority. You strike a deal, but the other party says they now have to get final approval from someone else. If you think this might be a possibility, ask up front "Can I assume we both have the authority to make a deal right now?"
And, a last important thought. If it becomes clear that a good outcome is very unlikely, don't be afraid to end the discussion. It's better to have no deal, than a bad one.
To learn more about managing cash flow, and other small business matters, contact SCORE, "Counselors to America's Small Business." SCORE is a nonprofit nationwide organization with more than 13,000 volunteer business counselors who provide free, confidential business counseling and low-cost training workshops to small business owners. Call the local SCORE chapter at 360-685-4259 to schedule an appointment. For details about the organization,visit SCORE.org.
Ask SCORE is prepared for The Bellingham Herald by Bob Dahms, a business counselor with the Bellingham chapter of SCORE. Submit questions for this column to firstname.lastname@example.org.