Basics of Negotiation for Beginners

[Monirul Islam]

People learn and practice the art of negotiation from the time they are young children. For a small business, negotiation can make or break your company. Making the best deal possible is especially critical in tough economic times. By following several tips, your small business can effectively apply negotiating skills in many situations to tighten your bottom line.
Preparation
Know who you are negotiating with. This requires some background research on your part. Talk to other business associates who have worked with the person or company before. They can provide valuable insight. Understand the product or service you plan to negotiate. Use strategic psychology in dealing with them. Have pricing in mind before you begin. Consider budgeting, management directives, sales goals and other outside forces. Deal with the right person who can make business decisions so you don't need to talk to someone else with more authority when you think you have already reached an agreement.
Strategize
Your first offer will usually set the tone for the rest of the negotiations. While you want to make an aggressive initial offer, don't be insulting. The final goal is to arrive at some type of agreement. See if you can bring something to the table that is not necessarily monetary, such as delivery, availability, service or another intangible. You can ask for these things as well. Some negotiations will only be concerned with the bottom line, so offering intangibles may not work in every situation. Be very cautious when discussing budget limitations. Watch for nonverbal cues when negotiating. Don't let the pressure to make a deal force you into a decision you will not be happy with later. Do not be forced into negotiating with yourself. If you make an offer, wait for a counteroffer from the other party.
Leverage
Focus on your strengths. If you are the only source with your product, you have great leverage. Consider the economic conditions and supply and demand. Use your bargaining power effectively. Steer the negotiations in the direction you hope the process goes.
Offer
Make an offer that includes all the specifics. This addresses not only financial compensation but how much work is involved, clarification regarding type of product, any incentives, warranties and service and paperwork. You can also trade a lower price for less service and use any points listed as bargaining chips. Negotiate any terms you have difficulty working with. Get everything in writing with all pertinent elements. Learn from what you have already accomplished. Make notes so you can track why you made each offer.
Win-Win
Assess the most important thing to both parties. You might care about price or delivery date; the other business might be concerned about product quality or follow-up service. Look at his priorities so you can give the other party what he needs without compromising your own position. Know what your bottom line is in each area. If you will work with this business in the future, take this into consideration during negotiations. Maintain your professional demeanor. Help the other party believe he got the best possible deal.
The Deal
Plan to finalize the deal and be prepared to compromise toward the end. Then sit back and congratulate yourself on a job well done.

Source:http://www.businessdictionary.com/article/570/basics-of-negotiation-for-beginners/