For a small business owner, much of the company's success hinges upon the negotiating table. This is where deals are made and alliances are built, but without a sound strategy and some skills, there could be plenty of missed opportunities.
With that in mind, every entrepreneur should practice for when the time comes to negotiate. A lack of preparation here could have serious ramifications for the company's financial plan, and it always pays to be ready for anything. Unfortunately, there are currently a lot of misconceptions and misinformation out there regarding this crucial element of the business world, and that could lead some people astray.
To avoid any problems, here are a few tips and tricks to get better at the negotiating table:
Don't be afraid of the opening offer
When making deals, many entrepreneurs are wary of making that first offer. This position could be perceived as a sign of weakness by some, but on the contrary, it could be much better to be in front, instead of following behind.
"Most people come with the very strong belief they should never make an opening offer," Northwestern University management professor Leigh Thompson told Inc. magazine. "Our research and lots of corroborating research shows that's completely backwards. The guy or gal who makes a first offer is better off."
This is likely due to the importance people place on that first bit of information, the news source noted. They'll often create a bias, and that can be used to a small business owner's advantage. Better yet, making the first offer is a good way to take control and shape the other person's perceptions of the deal.
Plan ahead before negotiating
When sitting down at the negotiating table, it often helps a small business owner to plan ahead before making any sort of concessions. Being prepared well in advance is a great way to avoid any problems and ensure that everything goes as smooth as possible,
Michael Wheeler, a professor at Harvard Business School, wrote for LinkedIn that creating an outline before negotiating is a positive. For starters, this plan will require a careful analysis of the pros and cons of any potential deal, which can prevent any snap decisions that could backfire. In addition, an outline will require a close observation about the person involved, especially their interests and intentions. This way, it will be easier to be prepared for any surprises, both good and bad.