Negotiation is a necessary and critical part of running a business. The right negotiations can create lucrative opportunities for businesses, form symbiotic relationships, and lead to greater success. When utilized to its full potential, the ability to negotiate can pay dividends for employers and businesses alike. Whether it’s negotiating price with suppliers, salaries with employees, or closing a high-value deal with a client, the ability to negotiate well is essential for any business. Here we will explore reasons why businesses either succeed or fail in negotiations.
Why Business Negotiations Fail
Lack of Preparation
In today’s busy and fast-paced world, it’s easy for businesses to forsake valuable preparatory time in hopes of “winging it” when they step into the meeting room. To the same point, many businesses also assume they have all the information they need to be successful and therefore forgo doing additional research. This lack of preparation can mean doomsday at the negotiating table. It is vital that businesses spend adequate time preparing for negotiations by studying market conditions, history, and the objectives and goals of both parties. Without the right preparation, businesses are likely to stumble.
Many deals are unsuccessful because of self-pride and ego. Some people may not be willing to make certain concessions or give things up because of their ego. On the other hand, the desire to be liked can also be a deal killer. You may give up more than you should simply to appease the other party. Getting wrapped up in your ego can be dangerous, especially when it comes to negotiations.
Fear of Failure
Another reason companies often fail in negotiations is simply because of fear. Fear of the unknown and fear of failure are common reasons for sabotaging a deal. Some negotiators are consumed with thinking about the possible negative outcomes associated with the deal rather than addressing and calming their fears.
Why Business Negotiations are Successful
The Needs of Both Parties Were Addressed
One of the most important tactics for a successful negotiation is listening and understanding the needs of the other party in addition to your own. Some of the worst negotiators are the ones who spend the entire time talking and controlling the conversation. Successful negotiators take the time to truly listen and empathize with the other party’s needs and point of view. Understanding each other’s needs will help negotiators reach a more successful outcome for everyone involved.
As stated before, there is nothing quite as important as preparation when it comes to negotiating. Good preparation involves the following:
- Researching and understanding the needs of the other party
- Reviewing the background of the person you are negotiating with as well as company values and history of decision making.
- Understanding the offerings and pricing of competitors
- Knowing your goals and objectives as well as your walkaway point
Negotiations are Polite and Courteous
No one wants to do business with someone who is rude, combative, arrogant, or aggressive. Nor do they want to deal with someone who wants to play hardball. Not only is it to the company’s advantage to close the current deal, but there is also a good chance that they may want to do business with the other party again in the future. Establishing a good long-term relationship is advantageous for both parties, so all negotiations should be polite and courteous.