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Effective negotiation skills are critical to the success of an entrepreneur. How many times have you been in one or more of the following situations? You need to answer an employee who has asked for a salary increase; your primary supplier want to double his rates; or you are seeking financing and the banker is offering very little money for a substantial part of your company.

The stakes may be different in each case, but the common thread running through them is the need for negotiation skills. Negotiating is an activity that all entrepreneurs engage in to some degree, perhaps dozens of times every day.

Typically, negotiation takes place informally: on the telephone, at a quickly called meeting, or during an impromptu conversation with someone in the hallway. Sometimes negotiation can take place abruptly, when you are least prepared, and be concluded in a matter of seconds.

Regardless of the form negotiation takes, it is very important to have a well-developed set of negotiation skills in order to run your business successfully. Even if you feel you already have a talent for negotiating, there are always ways to develop and continuously improve your negotiation skills.

To develop these skills and use them effectively, you must know:

  • what negotiation means and the various forms it can take;
  • that negotiating, in the fullest sense, means forging long-term relationships;
  • the role that the individual personalities play in negotiating; and
  • that you must take a variety of approaches to negotiation, since no single set of principles will suffice in all circumstances.

What negotiation means. Most people, when they think of negotiation, have in mind those rare occasions when people sit at a table and hold intense discussions in some formal way. The major difference between this type of negotiation as compared to other types is the need for planning. Just like in any formal process, negotiation planning is a much more structured process. In these situations, it is important to:

  • develop an agenda for use in guiding the meeting;
  • define issues, alternatives, and what's in it for them/us;
  • have available an alternate type of contract if impasse is reached; and
  • have knowledge of the party you are negotiating with.

However, it is important to note that this type of negotiation is often the exception, not the rule. Most negotiations you will participate in will involve day-to-day operations of your business and will focus more on building long-term relationships than on making a deal. To increase your negotiation skills, you need to increase your awareness of what you are doing, and learn to use both your intellect as well as your intuition during the negotiation process.

The best way to approach negotiation is to be wisely cooperative. That is, look for areas of agreement that can benefit both sides. Of course, it is important to protect your own interests in such a way that you feel satisfied with the outcome of the negotiation.

Negotiating and long-term relationships. Good negotiators are the people who understand how to build key relationships, how to identify what people need, how to give them what they need and how to get what they want in return, all in a way that seems effortless.

Try to refrain from viewing negotiation as a competitive endeavor in which you have to make a killing in order to emerge the "winner."

Indeed, negotiation is best viewed as a stepping stone to forming relationships - with others in their own company, and with customers, suppliers and others - that have long-term consequences for your company. In this sense, negotiation never really ends. One piece of negotiation is often the beginning of the next phase of negotiation.

Negotiating and individual personalities. Broadly speaking, when it comes to negotiating, there are two personality types, and the characteristics of these types can affect the way they negotiate.

Autocratic negotiators typically hold the view that they are going to get what they want, because their perceived authority precludes the need to negotiate. These negotiators do not realize that they engage in a kind of one-sided negotiation that can antagonize others, with the result that the tasks they wish to see completed may be carried out improperly or not at all.

This type of negotiator must learn to be more collaborative. Autocratic negotiators have a tendency to miss seeing the big picture. When these types of negotiators fail to negotiate effectively, the results of their efforts often suffer. While autocratic types may believe they are skilled negotiators, they often are not because they lack the ability to listen and to empathize.

The second personality type is the accommodating negotiator. These people are more concerned with what others want than with their own needs. In order to avoid conflict, they do not negotiate at all and often end up overriding their own interests. Since negotiation often implies conflict (something these types of negotiators avoid at all costs), it is critical for them to take responsibility for forcing a certain amount of compromise. This is the only way they will be able to lead others effectively.

If, after becoming aware of your personal strengths and weaknesses as a negotiators , you find that you do not feel comfortable negotiating in certain circumstances, it is probably best for you to have someone else negotiate on your behalf.

Negotiation and variety. It is critical to understand that negotiating cannot be learned by following a pre-packaged set of principles and applying them to all situations. That might work if everyone could be counted on to behave rationally and predictably, but they can't because people are often emotional and irrational. To negotiate well, you must be prepared to use a variety of approaches.

The good news is that like anything else, negotiation gets easier as you do it. With practice, you will develop your own personal style and become comfortable with your own limits. As in so many other things in life, experience is the best teacher when it comes to effective negotiations.

- by Stephen T. Furnari

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