This week’s “Ask the Mompreneur“ features an interview with Taffy Williams, CEO of Concord, N.C.-based Colonial Technology Development Co. Williams is a serial entrepreneur and biotech startup expert who has raised more than $100 million of investment capital.
QUESTION: How can we improve our negotiation skills in the new year?
ANSWER: A negotiation is a process that allows parties to engage in a relationship to obtain something they need or want in exchange for something they are willing to give in return. This occurs in everyday life, not just high-stakes business deals, so we really all have experience in negotiating.
Tip No. 1: Negotiating starts at your first interaction. We learn negotiating skills very early in life, such as promising to be good to get a new toy, and try to improve them as we age. But not everyone realizes that negotiations start with first contact. The parties start to develop an understanding of each other’s personalities, likes and dislikes. They may learn something about how much one side is willing to give and how important the item or service is to that individual.
Negotiating requires development of a relationship with the other party. The better you understand the other side and their needs, the better you can relate to them. Secondly, negotiations require a bit of salesmanship. The ability to communicate the positive attributes make the item or service appear more attractive and thus worth more.
You are negotiating even before your start formal discussions. What you say and do provides the other side with information about you and your product or service. By the time you’re actively trying to convince someone about the value of your offer, they may have already formed an opinion on the matter.
Tip No. 2: Learn as much as possible. Learning as much as possible about the topic helps you obtain more of what you want. For example, suppose you are selling something at a garage sale. The item may have some historical value and possibly is an antique. Someone expressing interest may view it as just something old and would attach a much lower value. Your knowledge shared with the person can help demonstrate why they are offering too little for the item.
The same goes for deals in the workplace. The more you can prove your point with data, the better your chances to win the other side over to your arguments; so do your homework.
Tip No. 3: Watch where you set your anchor. An anchor is a set point that sets perspective in the discussion. For example, suppose you go to a restaurant and the menu shows a price of $250 for a bottle of wine. The next price down is $80, which by comparison looks like a good deal. The higher-priced bottle serves as an anchor and causes you to evaluate everything else on the menu relative to that initial price.
The same is true in a negotiation. You can make an initial offer that will anchor the discussion. The key is to avoid offers that are unrealistically high or low, which may cause the deal to fall apart because the offer is not reasonable. The perception that no logical argument will bring the sides closer together can end the negotiation on the spot, so select an anchor that is advantageous to you, but fair.
Tip No. 4: Do not be afraid to walk away. Win-win deals last longer and work better. That’s why it is imperative that the parties take time to understand what constitutes a win for the other side. Be genuinely curious about the other party’s bottom line and make sure you understand their priorities for the negotiation.
But sometimes the other side is not willing to be reasonable and has a “winner take all“ strategy of negotiations. You must always be prepared to walk away from a negotiation if the deal does not work for you. You may not get what you wanted, but you won’t end up with a poor deal that you will live to regret. The other side might change their tactics if they see you willing to walk away.
Negotiating is a natural, human process, so don’t be intimidated by it in a business setting.
Jennie Wong is an executive coach, author of the e-book “Ask the Mompreneur“ and the founder of the social shopping website CartCentric.com. Email her at TheJennieWonggmail.com.