From vendor contracts to salary negotiations, finance executives must be masters of the art of negotiation. In this guide, you’ll learn tips and tricks to help you develop your negotiation skills and confidently face any situation.
Before you come to the negotiation table, make sure to do your homework. Consider the following questions:
- What do I know about this person or company?
- What is my current/future relationship with them?
- What questions might I ask them to validate my research?
- What questions might they ask me?
- What are some challenges I might face during negotiations?
The more you can anticipate the flow of the conversation, the more you can stay confident and in control of the negotiation process.
Be specific about what you want. For instance, if you’re negotiating a salary increase, specify that you’re looking for a 15% raise. Make sure to justify any request with objective data: “I’m asking to renew our contract at a 10% increase, due to the high volume of business we do with your company.”
Always start by requesting what you ideally want — not merely what you’re willing to settle for. Buyers should offer a lower rate than they’re prepared to pay, while sellers should offer a higher rate than they’re prepared to accept.
After all, the other party might just accept this initial request. But if not, you’ll have room to negotiate down to a price or contract that both parties will find reasonable.
Understand the Other Party’s Needs
Remember — negotiation goes both ways. You’ll be a more effective negotiator if you understand the other person’s needs and can offer them empathy or even work within their professional framework.
For example, imagine you’re negotiating with a software developer who is unrolling a new product. You know they need help getting the word out, so you offer to provide a testimonial in exchange for a small discount.
Plan Concessions in Advance
Negotiating is all about the art of give-and-take. To achieve the greatest success, you’ll need to decide what you’re willing to give up or offer before you come to the negotiation table.
If your company has a strong cash flow, you might consider offering early payments to a vendor you know is cash poor. Or if you’re negotiating a salary, you might agree to work for the company for a set amount of time in order to receive a pay bump.
Keep Your Emotions in Check
It’s easy to let your emotions get the best of you, especially if the negotiation isn’t going the way you planned. Stay calm. The worst-case scenario is that you don’t agree on a contract.
Take a break if needed, or at least take a deep breath. Keeping your emotions in check can help you think clearly and respond wisely even during a high-pressure negotiation.
Most of the art of negotiation isn’t about speaking at all but listening to the other party. This is why it helps to plan ahead and come with good questions. Ask open-ended questions and then listen well. This can help you build rapport, which can lead to a smoother negotiation.
Watch your body language during the meeting. Folded arms, for example, can make you appear hostile or closed. Leaning forward, on the other hand, can be a sign of empathy and can help you build understanding.
Know When to Compromise
You’re never going to get exactly what you want out of a negotiation. Focus on the big picture — decide what items, prices, or concessions you must have versus things you might simply like to have.
As long as you get your “must haves” met, it’s okay that you don’t get all your “nice to haves” this time around.
Know When to Walk Away
Not every negotiation will go the way you expect. Before you start the negotiation, determine your minimum outcomes. What is the lowest price you’re willing to accept from a client or job offer? What is the highest price you’re willing to pay for a product or service?
If your minimum expectations aren’t being met, it may be time to walk away. And who knows? This could even prompt the other party to reconsider and meet your terms.
Keep Your Options Open
Focusing on just one vendor or company will only increase the pressure to close the deal. Instead, work with several different vendors to compare rates and terms.
This can also be a negotiation tactic, as you can share the offers of other companies in order to persuade vendors to outperform their competitors. Just make sure to validate these other offers with an estimate or quote.
Does Practice Make Perfect?
Negotiating is a skill that takes time to develop, like building a muscle. Give yourself time and practice to hone your negotiating tactics. Stay calm, stay confident, and you can soon become a tough-but-fair negotiator.