How to Negotiate Effectively (Creating Success)

Prepare

If you negotiate casually you will never optimise your effectiveness. The more important the negotiation, the more preparation you should do. If you have not prepared properly and the other person has, you are at a disadvantage immediately. It will make you feel unprofessional and weak, and to be honest, at that moment, you are. Lack of preparation will nearly always cost you money.

When we prepare, we need to ask ourselves questions about the other person. We must form a judgement about what may or may not be important to that person:

• What is important to them in making their decision?

• Where will they seek to negotiate?

• What combination of factors is likely to be important: cost, price, quantities, delivery, exclusive terms, credit, stock-holding, training, confidentiality, after-sales, maintenance, guarantees, contract length?

Seek to uncover preferences, needs, obstacles, opportunities and problems. In each of these five cases, ask how they could be related to the negotiation in hand.

We also need to prepare our own position. What is our objective? What price level are we aiming for? Good negotiators have an ideal objective, which still enables a win-win outcome. They have also thought through a worst-case scenario, which is their bottom line, below which they will not go.

We must evaluate where we can shift in the process. We must ensure that we know the cost of everything and anything that we could use in the negotiation. Examples include the costs of giving on price, costs of changed payment, costs of rearranging delivery; in short, the cost of every proposed change you could make, or offer that you could give.

Having evaluated the information, effective negotiators plan their approach to trading and concessions. The effective negotiator will hunt out common ground and evaluate long-term needs, and as a result will have far more trading options.

Summarising our process of preparation - effective negotiation will depend on your accurately identifying at the preparation stage:

• the other person's possible opening statement or position;

• how you will move from that opening statement towards your aspirations;

• your counterpart's potential problems, obstacles, opportunities, needs and preferences;

• your ideal and your bottom line;

• the cost of any possible movement you might make and its benefit to your counterpart;

• the concessions your counterpart could make and how you might make them appear trivial or worthless.