Negotiating Skill Startup

Negotiating Skill Startup - Necessity

Negotiating skill startup- Why is  it essential?

All startup entrepreneurs, especially, solopreneurs will be required to negotiate on a host of things, like raising funds, hiring employees, fixing prices with customers etc.

The entrepreneurs would like to achieve their objectives and at the end of the negotiations, would like to feel theyhave not given away too much.

“Negotiation in the classic diplomatic sense assumes parties more anxious to agree than to disagree.”-Dean Acheson- American Statesman

Negotiation is a skill and can be learnt by anyone by practicing  and following a process.

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 Negotiating Skill Startup- Negotiation Process

1.    Preparation

Preparing for any negotiation is important. The negotiator should gather information about the party with whom they will be negotiating.

                              i.        Work out your alternatives available before the start of negotiations

                            ii.        Decide on the minimum price/terms you will accept before starting the negotiations ( gather data on competitors) 

2.    Goals or expected outcomes 

3.     Actual Negotiation-Win-Win approach

                                      i.        Amount of time

                                    ii.        Exploration of options

                                   iii.        Common ground vs conflict area

                                   iv.        Comment on Long term /Short term

                                    v.        Sequence and issue planning – Flexibility 

4.    Reaching Agreement ( Face to Face)

                      i.        Irritators

                    ii.        Asking Questions

                   iii.        Argument dilution

                   iv.        Testing, understanding and summarizing

                    v.        Reviewing negotiations 

5.    Implementing 

6.    Resolution Mechanism in case of conflicts during implementation

 Negotiating Skill Startup - Guidelines

1.BEST ALTERNATIVE TO A NEGOTIATED AGREEMENT – ‘BATNA'  

.Anticipate the course of action that will be taken by a party engaged in negotiations if the talks fail and no agreement is reached. The term BATNA was coined by  Roger Fisher and William Ury in their 1981 bestseller, "Getting to Yes: Negotiating Agreement Without Giving In." A party's BATNA refers to what they can fall back on if a negotiation proves unsuccessful.

BREAKING DOWN’ BATNA'  

BATNAs may be developed for any situation that calls for negotiations, from negotiating a pay hike to resolving complex conflicts. While a BATNA may not always be easily identifiable, Fisher and Ury have outlined a simple three-step process for determining it:

      i.        Develop a list of actions to take if no agreement is reached

    ii.        Convert the more promising ideas into practical options

    iii.            Tentatively select the option that seems best

2. Human Psychology

Human beings react to words, phrases and body language of others and the reaction may not be same on all occasions. Understanding this will help in resolving any disagreements or miscommunications.

3. Interpersonal Skills

Establishing emotional bond and trust are key factors for successful negotiations. Informal occasions like lunch, tea break or over drinks are ideal time to break barriers

4. Emotional Leak

The negotiator’s body language may affect the strategy part of negotiations. It has been observed that even  world leaders during crucial discussions  bite their lips or have  drooped shoulders or keep their hands on the head. This gives opportunity to the other party to notice the stress and thus  press for concessions.

5. Observation Skills

Russians always include a team member whose role is only to observe the members on the other side. He does not participate in negotiations. However, he is the spokesperson when  teams meet to share  their observations. Based on his inputs, they plan their next strategic move.

It is  a good plan  for solopreneurs to take a friend, a business coach or an employee   along with them as an observer, since  they may not be able to notice  the micro expressions of the other party in the thick of discussions.

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Negotiating Skill Startup- A Gem

“A negotiator should observe everything. You must be part Sherlock Holmes, part Sigmund Freud.” – Victor Kiam

A Case Study- A Win - Win

Tim wanted to sell his four-year-old Toyota Corolla car. He checked on the used car website and arrived at a value of $ 5000 “as is where is condition”.  He fixed as his base price.

Now coming to the buyer, Victor was looking for a second hand  Toyota Car.He could not afford a new car. His research ,finally  came up with  three models within his budget. Tim’s  advertisement attracted his attention.  Victor was aware that the price of the 3-4 year old car was around $5500-6000.

He approached Tim who pitched his price at $ 6000. Victor countered with an offer of $ 5000.How the scenario is likely to be played out?

1.       Tim does not negotiate and accepts the offer.

2.    Tim does not accept the price and gives a counter offer of $ 5500. Victor decides on $ 5300 and both  of them settle on this amount.

This is a win-win situation where both the  buyer and  the seller  feel like winners.