Newell advised attendees to focus their time and energy on preparing so that both parties are more apt to come to an agreement. At the same time, he cautioned against finalizing a negotiation without careful consideration of the cost.
“Maybe the agreement isn’t going to work, and that’s ok,” he said. “Be prepared to walk away. Many people feel that if you walk away from a negotiation, you’ve lost, and that’s typically not the case. You’re making an intelligent business decision. If you walk into a negotiation, you shouldn’t come out worse off than you were before.”
As business owners, some type of negotiation is taking place every day, whether it’s with vendors, customers, insurance companies, technicians/employees, the landlord or the bank. There needs to be value added on both sides of the table, according to Newell, otherwise it will never work.
“Negotiations can be difficult,” said Newell. “If we could improve the way that we can communicate what we’re looking for, I think we would yield better results.”
Taking Steps to Prepare
Newell said the first step is to establish a team composed of everyone in the organization who is involved in the negotiating process. The “lead” is the primary negotiator and main contact between both parties. Then there is the “support” team that can assist with information-gathering and be part of a committee and/or board to ensure everyone is aligned.
“Do not have too many cooks in the kitchen or it can convolute the process; you’ll run into problems and the message often gets diluted,” advised Newell.
Next, you’ll want to define your target and ensure it is precise, laser-focused and strategic.
“If your part discount is 1 percent and you want to go to 1.25, that’s your target,” explained Newell.
Targets need to be achievable and realistic to achieve the negotiation.
“Remove all emotion from your target,” advised Newell. “Targets need to be based within the business and based on numbers or an end result.”
After defining the target, Newell said it’s time to gather the necessary information.