4 tips to improve your negotiation skills

One of the biggest challenges facing small businesses is the development of management skills when it comes to negotiating a contract, according to Small Business Commissioner Mark Brennan. Whether it's negotiating your lease, supply contract or a big customer project, these skills will always come in handy when your goal is to persuade someone to your point of view. Here are five quick tips to help you improve your negotiation skills.

Research, research, research

Knowledge is power when it comes to negotiating in your favour, so ensure you thoroughly research the other party's background and objectives. It's also imperative to know what you want to achieve from the negotiation. For example, if your aim is to argue down the cost of supplies, ensure you know how much it costs the supplier to make the product in the first place and how much they are charging you on top of that. According to warehousing company ISS, the more you know about your supplier and their industry, the higher your chances are of winning the argument. In terms of a supplier negotiation, ISS recommends obtaining plenty of quotes and finding out how competitive the supplier's market is, to determine the strength of your bargaining power.

Understand your legal rights

Small Business Commissioner Mark Brennan, a small business owner himself, believes that firms should take the time to understand their legal rights and obligations. It's easier to bargain if you're going by the book as not many want to contradict the law. In terms of negotiating a lease, Mr Brennan provides a few tips.

"What I suggest to small businesses is that they go to their lawyer with their lease or contract with two highlighter pens. They say to the lawyer, I want you to take me through the lease and mark in green all the things I have to do according to the lease. Now take me through the lease and mark in orange everything the landlord or other party has to do. I think it's a useful, practical hint to give to businesses and they come away with a better understanding of what they have to do," he said during the Adelaide HomeBiz Connect event  last week.

Be flexible

Businesses also need to be flexible when negotiating - it is, after all, a two-way street and businesses should compromise where necessary. Asking for a 50 per cent cost saving, for example, can be unrealistic to the other party, so it may be more effective to meet in the middle and agree on a 25 per cent discount on pricing. Harvard Law School columnist, Andrea Kupfer Schneider, says that skilled negotiators should cultivate flexibility and "listen closely and collaborate to create value". However, when making a concession, try and get something back in return to avoid appearing too eager to close the deal.

Know what you will and will not negotiate

Being flexible doesn't mean you should let the other party walk all over you. It's important to be assertive and stick to your core principles and objectives. For instance, if a customer is bargaining with you on price, you may be able to lower them but you may decide that payment terms are absolutely non-negotiable. Determining how much you can realistically gain before you walk into the negotiation can help you better achieve your desired outcome.

Once you've negotiated the best outcome for your business, you can then draw up a contract to be signed by both parties. Having a written record of the deal will make it difficult for both parties to back out  or renegotiate.

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