How to negotiate for your small business

If you can’t account for negotiations in sales, then you’re always going to leave those conversations feeling like you’ve been taken advantage of or you’re not standing up for yourself. You have to figure out how to approach negotiations in a professional way where it’s a win-win situation, and you walk away feeling like you got exactly what you deserve.

Think about the last time that you had to negotiate something. Maybe you were onboarding a new staff member, and you said, “Here’s the salary offer,” and then they decided to counter. Or you’ve tried buying a car, it’s terrible when they play mind tricks on you. Great negotiators can make you feel guilty.

I hate those conflicts, but here’s what I’ve learned after being in business for well over a decade. When you approach negotiations, you have a point of view (there are certain things that you want to happen to make things work for you), and they have a point of view (there are certain things they want to happen to make things work for them). Somewhere in all this, there’s some overlap, and it’s a beautiful thing because it’s about being professional.

I have a point of view that makes sense to me. And so do you.. So I value your point of view, and you value my point of view. When you think about it in these terms, it takes all the pressure off thinking that you’re somehow going to fight it out, or that at some point it’s going to get nasty. Really, if you’re negotiating on something, it’s a partnership, or it’s a working relationship. You don’t want to be walking away from someone you want to work with, someone who’s going to be a client or someone you’re going to have a business relationship with.

The very best thing that you can do for yourself is to respect your position. Understand who you are and don’t feel guilty about it. Don’t feel worried or embarrassed about anything. Just come to terms with who you are, what you need, and what you want. If you can do that, then you can approach any conversation in a black-and-white point of view. That is, you know what makes sense and what doesn’t make sense.

Of course, there are many detailed negotiation tactics. I think most of these tactics make people feel adversarial, rather than working with each other. It’s inauthentic to be fighting for the same thing and then a few days later come back together like you’re all one big happy family on the same team. The way I approach it is; I ask myself how can we be one big happy family on the same team before and during the negotiation.

If you know that you’re about to face any kind of negotiation, big or small, here’s what you need to do. First, you need to be prepared. You need to be able to work through what you want, what you need, and what is acceptable. And you need to know how long the process is before you enter into it. Decide the framework. Decide your approach. Maybe share that with the other party. Communicate that. Be really open with what your expectations are out of the negotiation. When there’s a tough negotiation where an arbitrator is brought in, that arbitrator usually sets ground rules for what is acceptable and what’s not.

The second thing you need to do is, you need to be able to understand leverage. Negotiations just come down to leverage and who has it. Understanding the different nuances of leverage and who has it is really key.

Then of course, with leverage comes the question, “Are you willing to walk away?” This is where most people fall into trouble with negotiations. They think that there’s an opportunity in front of them, and that is their one shot. They would say, “I want to go out and buy that home. I’ve fallen in love with it. I have to have that home.” Guess what, if you don’t buy that home, you’re going to buy a different home. You’re going to fall in love with a different home. Right?

You can walk away from a negotiation. There’s nothing wrong with that. They don’t have leverage over you. So, don’t fall into the trap of buying something or signing something or entering into something that doesn’t make sense because of time pressure, because you feel you have to do it, or because it seems to be your only one shot.

You go to buy a car, and they’re going to make it seem like this is the only blue one on the lot and you better get it. It’s like the last time I bought a car for my wife. I really pissed the people off. I was prepared. I set the groundwork. I figured out how to have leverage over them. I went through three different dealers across the entire province who had the exact car that I wanted. I emailed each of those dealers and said, “Hey, I am emailing three dealerships. I want this car. I’m trading in this vehicle. If you want to participate, send me your best price.” Now they don’t have any leverage over me because I’ve decided what I want. I’ve decided how I’m going to play this game. But there was still a little negotiation in there. The dealership called me up and said, “Hey, I can only get it down to this price.” So I said, “Listen, I want your vehicle. I want the vehicle that you have, and I will come in today and buy it off of you.” I was happy, and I bought the vehicle.

Then the third and last thing—and this is really key—is to have empathy for their position. I need to arrive at a win-win deal in this situation. While I’m preparing, I spend time thinking as if I were them. What would they need to get out of this to make this work?

I’ve bought two houses so far in my life, and I’ve sold one, so I’ve been on both sides. I know that when I’m selling, I should be paid what it’s worth because it’s a representation of who I am. There are a lot of emotions tied into that. On the other hand, I’ve also bought homes. When I buy homes, I have all my dreams of what the future could be tied to it. I typically lowball, but I also try to be really rational. I also don’t nitpick stuff. When you put yourself in the position of the other person and you understand that some people start high and other people start low, you can meet in the middle, or you can just say, “Listen, I’ve already done the math. You’re going to come in at this, and I’m going to come in at this. We’re going to go back and forth. Let’s save each other time. Let’s save all the effort. Why don’t we just start here?”

In negotiations, big or small ones, these are the things that you need to do to get yourself into a better position. However, what if the scenario is like this: The person starts high, and you start low. You negotiate, and you end up in the middle. Then they take that as their starting point and negotiate even harder? Well, if you’re prepared, if you understand the leverage, and if you’ve done all the steps I’ve mentioned, you can just walk away. There’s nothing wrong with walking away. It isn’t a loss. Walking away is a win. Forget it. Tell them, “There are other places I can go. Thank you very much.” and just walk away.

When you approach negotiations in your business or with the people in your life, come at it through a practical manner. Remove the emotion. Remove the “for me to win, you have to lose” way of thinking. If you do this, you will find that not only will negotiations be less scary for you, but you’re also going to have better business relationships. You’re going to close more deals, and people, in general, are just going to like you a lot more. They’re going to like you because you’re not coming in like a shark. You’re coming in as a partner, and that’s ultimately what business is all about.