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.
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)
ii. Asking Questions
iii. Argument dilution
iv. Testing, understanding and summarizing
v. Reviewing negotiations
6. Resolution Mechanism in case of conflicts during implementation
.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
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.
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
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.
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.
“A negotiator should observe everything. You must be part Sherlock Holmes, part Sigmund Freud.” – Victor Kiam
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.