02 February 2011

Negotiation for Small Business With Erin Engstrom

Negotiation, an anxiety riddled word for some of us. Negotiation seems daunting because we recognize it with stressful events such as the purchase of car or home, legal proceedings or business negotiations. Negotiation is a skill that can take years to develop, there are many theories and strategies to learn and apply. There are also styles of negotiation and of course the personality of the negotiator to contend with. With all that negotiation is and can be, many of us feel that we are not equipped or skilled enough to handle a negotiation when it occurs.

Believe it or not, you have been negotiating your whole life! Think back to when you were a child and you wanted a certain toy to play with that maybe wasn’t available or you didn’t have yet. What did you do to get it? Cry, take it, or beg for it? As a teenager you wanted your parents to let you take the car out on a Friday night. What did you do to get them to agree? Did you offer your chore services? Offer to do something out of the ordinary that benefited them? If you are a parent, you negotiate daily with your children. If they want something that isn’t good for them you provide them with alternatives. Even though we are all born with an ability to negotiate, we are not all effective negotiators.

Negotiation is a practice that takes skill. The most skilled negotiators are self-made. It takes self-awareness and intuition and the strength to accept that we have to lose some in order to win some.

As a small business owner we find ourselves involved in several negotiations daily or sometimes over a long period of time. We also may ask ourselves some of the following questions;

What are the best negotiating tips for small businesses?
The best negotiations are the ones that have been thought about and planned. The key is that you have to determine your alternatives to a negotiated agreement. In order to determine your alternatives you must take a self-assessment of your wants and needs and you must determine your reservation point, or rather, when you must walk away, even if there is no agreement. You must make an assessment of the other party and an assessment of the situation. Failure to assess the other party and the situation will result in an unfavorable result. Consider that you are scientist working on a breakthrough drug that will help malnutritioned children to absorb and maintain food nutrients for longer periods of time. You have found a farmer who sells a rare flower that holds the working ingredient for the drug. You approach the farmer, who already has a buy for the flower. You attempt to convince the farmer of the importance of the flower. He puts you in touch with the other buyer who needs to purchase the flower for their new anti-aging skin cream. You both bicker over the importance of the flower and your individual needs. While you both argue over the flower, the farmer sells to another party for much more money than either you or the skin cream manufacturer was willing to pay. What if after all was said and done, you learn that the skin-cream only needed the petals and you needed the stem? Assessing yourself, the other party and the situation may have resulted in a favorable result for both parties. Both could have purchased the flower, directly from the farmer with a combined offer or you could have bought the stems from your competitor. However, this would only have been possible had determined each other’s needs.

What are some basic mediation strategies that could be useful when dealing with upset customers?
Remain calm. Listen. Reframe their complaints into the positive and suggest solutions. Issuing an apology or merely saying that you understand and hear them can go a long way. I would also recommend taking a step back and consider that there may be something else fueling the distress. When negotiating, it is important to separate the person from the problem.

At what stage should a small biz owner get a professional mediator involved in a dispute?
I would recommend getting a professional mediator involved if the other party has becoming threatening or they are unwilling to negotiate directly with you, as in they obtained an attorney or filed a lawsuit. I would also suggest a mediator if there are outside people influencing you or the other party. You can obtain mediation or negotiation help from a mediator or contact SMU’s Center for Dispute Resolution in Plano, TX for a more formal proceeding.

What are three things you should never say in a negotiation?
Never accuse or place blame. Be willing to listen and reframe the other parties concerns so that they know you understand them.

What's the best frame of mind to be in when approaching a business negotiation?
Do not enter into a negotiation if you have hard feelings or are upset at the other party. I also recommend never entering into a negotiation unprepared or unknowledgeable about the party.

For more information on negotiation, I recommend “Getting to Yes” by Roger Fisher and William Ury.

Erin Engstrom holds a M.A. in Dispute Resolution from Southern Methodist University and is a certified Mediator and Insurance Arbitrator. She has over 10 years of experience in negotiating civil disputes.

1 comment:

Pili said...

Loads of useful info here, for both sellers & buyers, and in any other case in life, really!

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