The importance of negotiation skills in business & how to develop them

At every stage of communication in the business lifecycle, skilled negotiation is a must-have technique that managers should possess. And while the word negotiation can sometimes bring to mind heated talks with clients across the boardroom table, things like creating rapport, asking the right questions and using body language to your advantage are all part and parcel of proper negotiation technique.

If this is an area you’ve sometimes struggled with, or you’re looking to get a head start for when the time comes to talk the talk, you’re in luck. We’ll go into the importance of such a highly-valued skill, as well the ways you can learn how to negotiate effectively without compromising or over-promising.  

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Why do business owners need negotiating skills?

A negotiation mindset is the right mindset

As we’ve hinted at, strong negotiation skills will benefit you beyond the boardroom. Take, for instance, times when you need to meet with suppliers to get a better price for bulk goods, or when discussing responsibilities with a new employee during the hiring process. Strong negotiation skills are also beneficial when dealing with customers. Rather than settling for less, you’ll be in a position to reach an agreement that suits you both. A calm manner and professional attitude will speak volumes to customers. 

Makes for win-win situations

 Although some may believe that   negotiating only results in positive outcomes for one party, when done properly it can benefit everyone who’s involved. The best negotiators are those that can create win-win situations at the end of deal. It can be difficult, but consider the alternative: an overly-pushy ‘win’ which removes the goodwill of a more realistic approach. 

Boosts the bottom line

 With that said, the goal of negotiation is to get the best deal possible for you and your organisation. The knock-on effect of this is an improved bottom line.

For example, if you’re able to reduce costs by 10% through your ability to negotiate, then you’re able to send the money that’s been saved straight to your profit margin. 

Creates confidence

 A large part of negotiation is having the confidence to concentrate on what’s at stake without worrying about the other party. Without this confidence, you leave yourself open to an agreement which favours everyone else. Delivering presentations – and providing offers and counteroffers – with skill helps to achieve better results. Make sure you’re equipped with the necessary composure and assurance that you’ll deliver during your next negotiation.

Builds respect

 The right negotiating skills will be regarded with respect from employees, clients and customers. The impression you leave on people after a negotiation matters, and has a lasting impact on future meetings and your reputation within the industry. An advantage of making a positive impression is a mutual respect, which will generally lead to further negotiations in the future. 

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How can you develop your negotiation skills?

Know your audience, tailor your response

Whoever you’re talking to, you need to know the questions that you’re going to ask and what they want from the contact. Their priorities will be a key driving force in your own understanding, so get to know what kind of person they are, and align your own responses and language to what they’re saying.

 If you’re dealing with people who are analytical and precise, focus on providing plenty of quantitative information to them. On the other hand, those who are demanding and intuitive will only require the bare minimum information. The importance of understanding the type of person they are and adjusting to their personality and character shouldn’t be understated.

Listen carefully

 The more time you spend speaking, the more you are going to give away. Keep your cards close to your chest and stay quiet; rather than thinking about what you’re going to say next, exercise restraint, listen to what is being said and formulate a response based on their topic of talk.  

Don’t take things personally

Getting side-tracked by issues that aren’t related to the deal at hand often result in negotiations falling by the wayside. The successful negotiator focuses on problem solving in a way that affords respect to both parties. Concentrating on external factors can lead to roadblocks; in the event that somebody is being difficult to deal with or rude, look past their behaviour and avoid taking things personally.

Always get something in return

 Agreeing to discounts or allowances during negotiations is inevitable. If you have to give something away, make sure that you’re getting something in return. If the other party doesn’t feel obliged to return the favour, it’s likely that they’ll feel entitled to taking more over the course of the discussions. 

Prepare to make mistakes

 Formal negotiation training tends to involve students participating in role-play simulations designed to expose flaws in thinking and performance. However, it’s important to note that the mistakes highlighted don’t necessarily reflect your own personal shortcomings but are used to recognise and learn where you’ve gone wrong. It might make you uncomfortable to make repeated mistakes, but it’s part of the negotiation skill learning process.  

Practice makes perfect

 Before negotiating becomes a natural technique, new ideas must be developed into strategies that require dedicated time and practice. The learning process never really stops; newly-acquired negotiation skills need to be actively practiced, whether at work or at home. Try these strategies with your friends and family, where mistakes won’t be as costly, when compared to trying them in the workplace. The repeated application of strategies will slowly become second nature, replacing the techniques you would’ve previously used.

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