Negotiation is the most essential skill for a new-age entrepreneur. It not only ensures your business’ success but also makes it sustainable. Negotiation is the cushioning that prevents you from failure while dealing with clients, suppliers, and investors. 

Negotiation is usually done to achieve win-win deals. Amid high competition, negotiation impacts your bottom line significantly. In another blog, we discussed what negotiation skills are and why businesses can’t afford to ignore them. Today, we decided to share eight proven negotiation strategies that every entrepreneur should know. 

An emotionally driven negotiation can adversely affect your business relationships. Our negotiation hacks ensure that you maintain stronger long-term relationships while maximizing profit margins with ease.

Also Read: Secrets of Selling: 7 Psychological Tricks for Maximum Profit

1. Prepare Well in Advance

Do your homework well! That’s the first and most important tip. By preparing well, you lay a strong foundation for any successful negotiation. Keep yourself equipped with relevant data, industry trends, and an understanding of the other party’s perspective before entering into any discussion.

To understand it better, imagine you are negotiating with a supplier. Research about their production costs, competitor’s rates, and market conditions. All this information will give you an upper hand in the negotiation process.

With proper research about the subject, you gain the necessary confidence and make decisions based on factual information.

Tips:

• Take advantage of the objectives and pressure points of the other party
• Plan the best alternative to a negotiated agreement
• Prepare counteroffers to maximize profit margins 

2. Set Your Goals

You must have a clear goal in mind before entering into a negotiation. Otherwise, you may end up signing a bad deal. A goal, or multiple goals, can be based on a favorable price, terms of delivery, or volume of the desired product or service.

While planning your goals, also plan your walk-away point so that the other party knows the limit of negotiation. A walk-away point prevents you from falling into a pitfall during negotiation.  Clarifying what you want and don’t makes you feel powerful in the negotiation process. 

Clarity powers you to push forward and step back when required. Remember, you don’t need to settle for less. Negotiate nicely to gain healthy profit margins.

Tips:

• Make a list of minimum acceptable terms
• Don’t hesitate to walk away if you don’t get the desired results
• Stick to your non-negotiable terms

3. Take Lead by Anchoring Your Offer

Anchor is the first offer in the negotiation process. The one who anchors the offer first gets a fair advantage as it sets the tone for the negotiation. You can define the desired price or terms of negotiation clearly in the anchor offer. 

Anchor forces the other party to mentally adjust around your first offer. While dropping an anchor, don’t be overly ambitious and keep it reasonable enough for the other party. Like you, the other party also has the option to walk away at any point in the negotiation. 

When an anchor is positioned correctly, your chances of desired final agreement get additional strength. Plan your first offer carefully to protect and increase your profit margin.

Tips:

• Don’t get swayed by emotions while making the first offer
• Justify your anchor offer with relevant data
• Prepare a plan B for the failure of the initial offer

4. Leverage the Power of Silence

Silence doesn’t make you weak but often stronger, especially when you are in negotiation. Resist your temptation to chat with the other party around or away from the negotiation. Take advantage by remaining silent after making your initial offer or hearing one from the other party. 

The other party might sense your silence as a sign of dissatisfaction and they might come up with an improved offer. Just be patient and let your silence communicate confidence and control. A positive attitude often puts psychological pressure on your counterpart and benefits your profit margins.

Tips:

• Stay silent when it’s required; let the other party react
• Resist responding too quickly, even if you receive a favorable offer
• Don’t make it awkward; use non-verbal cues like a slight pause

5. Keep Time in Your Favour

While making an offer, create a sense of urgency or emphasize the time constraints. Make it as dramatic as possible to put pressure on your counterpart. Either try to close a deal quickly or take time to accept their terms until they offer you a better deal. 

While taking advantage of time, don’t let time pressure force you into a poor agreement. Use timing as a skill to sign better terms without showing your desperation. Time is the key to securing higher profit margins.

Tips:

• Take advantage if the other party has time constraints
• Take extra time to think and keep the pace of negotiations slow
• Never show up if you are in a hurry to sign a deal

6. Think Beyond Price

While price plays a critical role in maximizing profits, don’t forget to negotiate on value as well. Value often offers more flexibility than pricing in negotiation. 

As an example of how you can negotiate one value, imagine your supplier isn’t ready to reduce the price of raw material. Negotiate for other value-added features like faster delivery, better service or extended payment terms. 

While these additions look small on paper, they can leave a big impact on your cash flow. They cut down operational costs even against the unchanged upfront cost. Negotiation for additional value boosts your overall profit without impacting the deal quality.

Tips:

• Make a list of value additions
• Negotiate for bulk discounts, training, manuals, and warranties
• Calculate how the added value helps increase your profit margin

7. Don’t Compromise Relationships

Negotiation is often done to achieve long-term gains but you must ensure that it doesn’t compromise your relationships in the business world. Maintain a collaborative and trustworthy relationship with your clients, suppliers, and partners even if you lose a negotiation. 

Let the other party know that you have kept the doors open for future deals. When you think of mutual success, the other party offers more favorable terms. Long-term relationships with your business partners give you flexibility to renegotiate. After all, parties wish to grow at the end of the negotiation. 

With harmony, you see smoother transactions and fewer conflicts with the dealing party. That’s an example of sustainable profitability over time.

Tips:

• Always think of a long-term partnership
• Understand their perspective and build trust
• Don’t be reluctant to revisit terms if you have a strong relationship

8. Always Ask for More

Negotiation rarely ends with a desired result. One has to accept a little less than what they have dreamt of. However, if you ask for more than what you want in a negotiation, you will likely meet what you actually want. 

A higher bid creates room for compromise. Even if the other party has an upper hand in negotiation and they feel like winning the deal, you will not be at a loss. The goal here is to secure a satisfactory deal.

With the other party winning, there is also a chance of an improved relationship. Isn’t it amazing? With such a subtle trick, you can sign the deal on your terms, build stronger relationships, and maximize your profit margins.

Tips:

• Fix a target and then set your initial ask higher than that
• Be flexible and accept small concessions
• Be realistic with your higher bid

That brings us to the end of our eight negotiation hacks, which can significantly up your game and the profitability of your business. Integrate a few or all of these strategies into your negotiation strategies. While growing profit margins, stronger negotiation skills will smoothen your entrepreneurial journey.