Coming to an Agreement in Negotiation

Once you have come to a final agreement, it is important that you have it down in writing along with both parties' signature: this is not always possible or practical. Before it is signed, or formally ordered, it is wise not to say anything about the terms agreed because your next sentence could break the agreement: the best sales-people never over sell - well, not until they have to!

If it is a sale/purchase that you are making, then officially, it isn't a sale until you/they have actually ordered the product/service. Usually, this will be an Order Form (we have one in our free business software). In most other negotiations, one party sending a letter and fax to the other in which the agreement is outlined (to a sufficient degree) will form a legal basis.

If the other party then amends the conditions in the agreement in writing to you, those amended terms then become part of the agreement, UNLESS you disagree in writing, and so on…


Summary

We use negotiation in everything we do but you have to be sure that it is done in the best way possible to achieve maximum benefit. The most important part is planning: preparing well will give you an advantage when negotiating.

Only use the knowledge and experience you need to achieve your objective: having the business owner negotiating the supply of pencils is over-kill, and leaves you little room to power-bargain with the same supply company when you want them to supply you with, say, colour photo-copiers.

Have confidence and be sure that you can keep control at all times. Aim highly, but don't underestimate the opposition. They too may have just read the same advice. If you're selling something, be persuasive and offer some incentive to keep the customer interested.

Don't close an agreement until you are happy. This could be difficult if you have been put in a 'corner' but this would perhaps be an effect of poor preparation.

Planning and How to Negotiate

Pre-Negotiation

Before you decide to negotiate, it is a good idea to prepare. What is it exactly that you want to negotiate? Set out your objectives (e.g. I want more time to pay off the loan). You have to take into account how it will benefit the other party by offering some sort of reward or incentive (explained later).

What is involved (money, sales, time, conditions, discounts, terms, etc)? Know your extremes: how much extra can you afford to give to settle an agreement? Although you are not aiming to give out the maximum, it is worth knowing so that you will not go out of your limits.

Know what your opposition is trying to achieve by their negotiation. This is useful information that could be used to your benefit and may well be used to reach a final agreement.

Consider what is valuable to your business, not the costs. You may end up losing something in the negotiation that is more valuable to your business than money. It could be a reliable client or your company reputation.

Why Negotiate?

If your reason for negotiation is seen as 'beating' the opposition, it is known as 'Distributive negotiation'. This way, you must be prepared to use persuasive tactics and you may not end up with maximum benefit. This is because your agreement is not being directed to a certain compromise and both parties are looking for a different outcome.

Should you feel your negotiation is much more 'friendly' with both parties aiming to reach agreement, it is known as 'Integrative negotiation'. This way usually brings an outcome where you will both benefit highly.

Negotiation, in a business context, can be used for selling, purchasing, staff (e.g. contracts), borrowing (e.g. loans) and transactions, along with anything else that you feel are applicable for your business.