How To Avoid 11 Common Negotiating Mistakes That Can Cost You Big Time
When it comes to running your fast lube business, skill in the art of negotiating can make your life easier and more profitable. Failing to develop a knack in this important part of doing business can silently eat away at the foundation you’ve built for your success.
You may not think of yourself as a negotiator, but Harvard Business School professor, Michael Watkins, said you are.
“Whatever your business, a good part of your time is spent negotiating,” he said.
He’s right, and nowhere is this more true than in a service business. Whether you’re negotiating with prospects or customers, suppliers, your landlord or employees, it’s critically important to put yourself in charge. Avoiding these 11 negotiating mistakes will help give you the upper hand:
• Not Building Relationships
There may be times when you have to enter into negotiations without any understanding of the other side’s positions. But wherever possible try to establish a relationship with the other party in advance; doing so will greatly increase your negotiating power. Even seemingly unimportant small talk can help to establish trust, while giving you some insight into how to deal with the other person.
Not knowing anything about your opponent in a negotiating situation is a major handicap. Establishing a relationship of any sort is a major step in reaching a satisfactory agreement.
•Talking Too Much
Negotiating professionals know talking too much is a sure way to lose command in a negotiating session. In negotiating, silence carries a great deal of power. Most people are uncomfortable with silence, and negotiating pros are well aware of that. Train yourself to get comfortable with the awkwardness of silence, and use it to your negotiating advantage. After a period of silence, the first person to speak will usually be at a disadvantage.
Of course, you have to talk during any negotiating session, but not talking enough is not likely to be your problem. As one pro put it, “He who talks the least learns the most.”
• Not Listening
Most experts agree good listeners are rare. It’s often easier for us to think about what we want to say next rather than listen to what is being said — it’s human nature. If that sounds familiar, you have a valuable opportunity to bolster your negotiating success.
Author and adjunct professor at NYU’s Stern School of Business, Michele Tillis Lederman agreed.
“Listening is a skill you must work on,” she said. “Listening is not a passive activity. It takes energy and concentration to focus on what people are saying and what they mean by it.”
If you talk over the other person or ignore what he or she is saying, it will be harder to find those areas of agreement that are essential to a successful negotiation.
• Failing to Understand the Difference Between Arguing and Negotiating.
In an argument, each person makes a strong and sometimes irreversible point for or against something. Under those conditions, seldom is any productive conclusion reached.
In contrast to that situation, the purpose of a negotiation session is for both sides to reach an agreement. Almost without exception, compromises on the part of both sides are necessary.
Since both parties in a negotiation often begin by wanting different conclusions, an amicable agreement can be reached only through skillful discussion that is not allowed to migrate from negotiation to argument. Negotiation skills on your part can help to avoid deal-killing conclusions.
• Waiting for the Other Party to Make the First Offer
Conventional wisdom has it you should always wait for the other party to make the first offer. However, there is no research supporting the claim that waiting for the other party to make the first move is advantageous. In fact, making the first offer can be a smart move. It can serve as an anchor, influencing the other party’s counteroffer.
If you do decide to make the first move, avoid making an unrealistic offer. Rather than establishing a commanding position, such a move can backfire by discouraging the other party from continuing in the negotiation.
Remember, first offers are hardly ever accepted, so make sure your offer allows room for maneuvering. If it’s so generous it is immediately accepted, the other party’s gratitude isn’t likely to be enough to convince you of your success.
• Not Knowing Your “BATNA”
Even though you enter a negotiation knowing exactly what you want, it’s best to understand that is not always possible. Skillful negotiation calls for careful advance consideration of other possible outcomes that may surface. That’s why it’s best to know in advance what the least is that you will agree to.
BATNA stands for Best Alternative to a Negotiated Agreement. The term originated in the book “Getting to Yes: Negotiating Agreement Without Giving In” by Roger Fisher and William Ury. Since its original publication in 1981, “Getting to Yes” has been translated into 18 languages and has sold more than 1 million copies in its various editions.
Even though your aim in negotiation is to come away with what you want, it’s important to decide in advance what your next-best alternative is (your BATNA). Having a clear BATNA makes it easier to press harder during negotiations, which may help you to get a better deal than you expected.
• Failing to Control Your Emotions
Entering into negotiations means the outcome is important to you. But it shouldn’t be so important you feel unable to walk away if the situation demands it. By keeping your emotions in check, you are less likely to enter into a bad deal. By maintaining the option to call it a day, you’ll be in a stronger bargaining position if the other party decides to try again. In that case, the pressure will be on him to improve his offer.
• Forgetting Everything is Negotiable
Don’t allow yourself to be persuaded anything on the table is non-negotiable. Negotiating pros know everything is negotiable. Don’t allow yourself to be sidetracked by statements declaring “this” is non-negotiable. Once you decide the terms for anything are subject to change, you give yourself a strong negotiating advantage by offering a sensible, viable and mutually beneficial alternative. The stronger your case, the more difficult it will be for the other side to say no.
• Failing to Prepare
Chances are you wouldn’t think of stepping up to a lectern to make a presentation without careful preparation. Even though you have a clear idea of what you want to accomplish in a negotiation, you still have to think about and prepare your arguments carefully. You also want to learn as much as possible about the other party whether it’s an employee, your landlord, a supplier or a potential big client.
No matter how major or minor, the more knowledge you can demonstrate about the subject of the negotiation, the more respect you will get from the other party and the more confident you will feel.
Also, good preparation makes it less likely you will forget something. It’s very important to include all pertinent data in your negotiation, since it would be extremely difficult to introduce new demands after negotiations have begun.
• Failing to Ask
It may sound obvious, but it’s important to remember the key to successful negotiations is asking for what you want. The fear of rejection or of appearing greedy can put a major dent in your negotiation success. Rejections during negotiations are going to happen. However, it’s important to remember rejections are not personal. They are nothing more than the feeling of the other party that your offer and your argument failed to substantiate why you should get what you are asking for.
When you get a “no,” remember to keep asking. Always have several alternatives to offer — and remember why you have your BATNA.
• Issuing an Ultimatum
If there is one deadly mistake inexperienced negotiators make it is beginning the negotiations with “This is our best and last offer.” Once that’s said, there’s no room for negotiation. The other party has been put in a defensive position making it unlikely a successful compromise can be reached.
While it may become necessary to become aggressive if the other party does so and attempts to be domineering, it’s always best to keep in mind the ultimate goal of a negotiating session is to reach a mutually acceptable conclusion. One solution should a deadlock be reached, is setting a deadline for the conclusion of the negotiations. This gives both parties time to reexamine their positions and reopen talks with a renewed effort to reach an agreement.
Entering into negotiation requires preparation, research and a clear understanding of not only what you want to achieve, but the other party’s goals, as well.