Whether you are in a purchasing role in your job or not, we all negotiate in life. You negotiate when buying a car or house, you negotiate when being offered a job, you negotiate for a raise with your employer, you negotiate with your spouse — and the list goes on and on.
Here are a few tips that I have learned along the way about negotiations:
- You don’t get what you deserve in life; you get what you negotiate. A lot of people don’t like to negotiate. They think it is beneath them. Those people get taken advantage of in life.
- Always do more “homework” than the person you’ll be negotiating with. It always amazes me when I go into a negotiation and the other party has done no homework on me or my company or the transaction at hand. If it’s worth negotiating, it’s worth preparing for. Try to find out as much as you can about the other party, their company and what their goals are in the negotiation. This will allow you to craft a negotiating strategy to maximize the outcome for you.
- Never let your opponent in a negotiation know any of your internal deadlines. If you do this, a skilled negotiator will drag out the negotiation until your deadline is looming and then you will agree to anything because you have to. On the other hand, if you can find out the other person’s deadline you can use this strategy to your advantage.
- He who appears to care the least wins the negotiation. If the other side senses that you absolutely have to have the item you are negotiating for, you have lost all your leverage. For example, when buying a house, I always find a lot of things to nitpick over. This puts the other party on the defensive and gives you the leverage. This can be applied to a lot of negotiations.
- In a negotiation, never give something unless you get something in return. I learned this early in my career. Professional negotiators never give on a point unless they get something in return. When I negotiate with someone who keeps giving me things I’m asking for without asking for anything in return, I know that I am dealing with an amateur and I use that to my advantage.
- When dealing with a commissioned salesperson, remember they believe that: “Something beats nothing every time.” Before most commissioned salespeople will walk away from a transaction and get nothing, they will give on a large number of points, because if they walk away from the transaction, they get nothing. If you are negotiating with someone who is paid on commission, keep this in mind.
- Try to make the other party go first. In other words, don’t be the first one to name a price. In a negotiation, always try to make the other party name the price and terms first. Generally, he who names the price first loses.
- Always “flinch” when someone quotes you a price for the first time. Then remain silent. When the other party caves in and names the price first, always flinch by saying things like, “Are you crazy? I can get it for half that price elsewhere,” or, “You are awfully darned proud of that, aren’t you?” When you are negotiating with an amateur, the flinch almost always gets them to immediately start negotiating against themselves and give you a lower price or better terms.
- “You can name the price, if I can name the terms.” When negotiating with someone who is hung up on getting a certain price for whatever they are selling, then negotiate over the terms. Over the years, I have agreed to a lower price than I wanted to sell something for, provided that I got paid in advance, the other party gets no return rights, etc. The terms of the negotiations are every bit as valuable, if not more so, than the price.
- Once the other party thinks you’ve agreed on a deal, keep “nibbling” for more. As soon as the other party thinks they have a deal, especially if, when doing your homework, you have found that they are desperate to sell, start nibbling. Once the seller has emotionally done the transaction in his or her head, they don’t like to walk away from the deal. That’s when you can ask for a lot of other things that will make the transaction better for you.
- In a negotiation, never admit to having the final authority. Always defer to someone else. A board, an executive committee, a CFO, etc. Amateurs like to show off by telling you that they have full negotiation authority. Even with owning my own company, I say things like, “I need to run this by my banker,” or, “I need to run this by my board.” I then step out of the room and either I do call someone whose opinion I value and get their ideas on the transaction or sometimes I just take the time to compose my thoughts further. Amateurs admit to having full authority — professionals do not.
Jim Sobeck is CEO of New South Construction Supply, a building products distributor based in Greenville with 10 locations in the Carolinas, Georgia and Florida. He is the author of “The Real Business 101: Lessons From the Trenches.” newsouthsupply.com.
