Western culture: the main reason why most of aren’t keen to negotiate on a deal. Yet for small businesses in particular, the ability to understand the processes involved in a negotiation can mean the difference between profit and loss.
Knowledge is power and it can take as little as one day to grasp the fundamentals of successful negotiation. Once learned, you’ll be surprised at just how often these skills come in handy, at work of course, but in your everyday life too.
Let’s look at a few figures first. A successful 1 million business might make ten percent profit. There are plenty of organisations with that kind of revenue making no more than two or three percent pre-tax profit. Imagine then a tough year like 2008, when costs rose dramatically and major customers refused to accept price increases of any kind.
By honing your negotiating skills, it’s quite realistic to expect improvements in your deals, depending on which commercial area you’re in, three or even five percent more might be feasible. The biggest challenge is to first accept that there’s a set of highly effective rules for negotiating and that professional buyers in particular know exactly how to use them.
Perception is reality. It is usually within your control to manipulate the environment of a deal and that one advantage can make a huge difference to the shape of a deal. Suppose you are buying a car and having looked around it, you’ve decided it’s exactly what you want. The sticker price on the car is 3,950 ‘or nearest offer’. So what does ‘or nearest offer’ tell you? It means the vendor doesn’t expect to get 3,950 at all. And what do you think he might be aiming to get?
So now you’re thinking he’d be happy with 3,700 and you haven’t done a thing yet.