Grow Your Small Business By Improving Your Negotiating Skills

/Grow Your Small Business By Improving Your Negotiating Skills

Grow Your Small Business By Improving Your Negotiating Skills

Any small business owner who is successful has become, through experience and time, an expert negotiator. The process of becoming an expert is so subtle that small business owners don’t even realize they have these skills until they start trying to negotiate everything from the cost of a cup of coffee to the plane tickets for an upcoming family vacation.

When you learn to negotiate properly, you are able to reduce costs and put more money on the bottom line. Some of the most effective cost-saving ideas come from negotiations with both sides of your business spectrum: your customers and your distributors. With your customers, the goal is to establish a relationship that inspires repeat business. With your distributors, the goal is to get the best price possible on the products that you sell.

Negotiating with Clients

If you feel that deception is part of your client negotiations, then you are definitely not on your way to becoming an expert negotiator. Lying is not only a bad business practice, it will lose you repeat business that will help your company grow. Clients don’t expect to be lied to, which is the best reason to always tell the truth. Your clients expect cost-saving ideas that will help them to run their home or business, and it is up to you to meet that expectation.

What Do Clients Want?

Your clients want you to solve their problem. You need to ask the right questions to find your client’s pain point and then explain how your product relieves that pain. Even if you are selling power tools, you still need to focus on solving a problem. It would be romantic to say that there is more to negotiating with clients than simply solving their problems, but problem solving is the essence of good negotiations.

The tricky part of solving a client’s problem is determining exactly what that problem may be. A car salesman might spend an hour trying to go over technical features to try and make a sale, but in the end, it turns out that the sticking point is the color of the vehicle. Identifying the client’s underlying issue and then solving that issue with your products will significantly increase your sales.

What Don’t Clients Want?

The most important thing to remember when negotiating with clients is that the client does not need to be told what they want. An expert negotiator learns to remove the phrase "what you really want" from their business vocabulary quickly.

Sometimes a client may be confused on the information they have read, which can cause the sales professional to think that the client needs to be corrected. Clients don’t want to be corrected. If you stay focused on the problem-solving aspect of your negotiation, then you will be able to get your clients the right information without having to backtrack and apologize for saying something you should not have said.

Negotiating the Deal

Negotiating with customers requires significantly more listening than talking on your part. Your goal is to understand the customer’s real problems and then start your negotiation with the close of the sale as your goal. It will take you time to develop the right questions to determine a customer’s need for your specific industry, but you should be writing all of your successful questions down and committing them to memory.

The concept of listening to the client cannot be overstated. The only way to find the client’s real problem is to listen to everything they say. Rather than asking the client what feature or model number they want, you should start the negotiation by asking the client about their goal. The customer might start off saying that they want a cheap car, but the reality is that the client is looking for an inexpensive van for their business. In most cases, customers will prefer value over just lowest cost. It is up to you to explain that value in your negotiations.

You may have noticed that we did not talk about price at all in this discussion about client negotiations. The best way you can reduce costs for your client is to present the best value. If your product is priced way too high, then you are unable to give the client the best value. But if your product has the right price and solves the client’s problem, then you have created value that is more important to the client than simply getting the lowest price.

Negotiating With Distributors

Transactions between distributors and retailers can be extremely complex, especially if there is a long-term agreement in place that dictates price. But in many cases, negotiated agreements that help to secure the lowest possible price for a fixed period of time can be the best ways to get good pricing. If you buy a commodity such as computer memory from a distributor, then locking in your price each year could be the best deal you will find anywhere.

What Do Distributors Want?

In order to become an expert negotiator with distributors, you need to realize that distributors are completely different than retail customers. While customers want the best value and would pay a little more to get that value, distributors are driven by price. Distributors operate at razor-thin margins, which means they are always looking for ways to get the best price on items and reduce costs on their side.

In the distribution world, everything happens at a rapid pace. Distributors are usually forced to keep their stock levels high by manufacturers, which means that negotiated deals need to happen quickly. Distributors want repeat customers who pay their bills on time and are always buying a steady flow of new product.

In order to negotiate from a position of strength, you need to make sure that you have the cash available to take advantage of the offer you negotiated with your distributor. You want to place your order with your negotiated price before the distributor changes its mind. One way to have the cash available is to secure a business loan through a reputable lender and set that money aside to place your newly negotiated order.

What Don’t Distributors Want?

Distributors, for the most part, don’t want to:

  • Wait for a deal to be finalized
  • Take back product
  • Get beaten on price by other distributors of equal or larger size
  • Wait to ship an order
  • Negotiate lower prices for single unit orders
  • Hear that their customers are going to other distributors

When you negotiate with distributors, you need to have your long-term financial success in mind. Distributors hate being price-shopped, which is why distributors are much more willing to negotiate with loyal customers. If you want to get the best price from a distributor, then don’t constantly pit one distributor against another in a pricing war.

Your best approach is to bring the competitor’s price to your distributor and let your distributor beat, match or come as close as possible to that price. Over the course of the year, you will find that being loyal to one distributor will save you more money than price shopping several distributors.

Negotiating the Deal

Retailers do not understand just how much power they truly hold in negotiations with distributors. Your distributor is desperate to sell units, and you should be leveraging that need to your advantage. If you know you will have an ongoing need for a product, then discuss pricing discounts with your distributor up front. Your distributor may even be willing to put that discount in writing, which is an agreement that you want to sign.

The key to being successful in your distributor negotiations is to either have the necessary credit available on your account to place an order or to have the cash on hand to finalize a negotiated price. The retailer who can finalize a negotiated price on the spot is the one who will continue to get great deals from their distributor.

You should never be afraid to use other distributors’ prices to get the deal you want with your distributor. Unlike the retail world, distributors are extremely cost conscious and you can use competitor pricing to reduce costs on your end and get the pricing you need for your business.

10 Ways You Can Improve Your Negotiating Skills By The Start Of Next Year

If you want to be an expert negotiator, then now is the time to get started. By following a few quick pieces of advice, you can be an expert at getting more for your small business within a few months.

1. Be Prepared To Fail

You will fail at your first few attempts at becoming an expert negotiator, and that is the best thing that could happen to you. You can learn more with your failures than you can with your successes, provided you are taking notes and keeping track of how you failed.

2. Develop Good Questions

You need to ask the right questions to get the conversation started with your clients. You need to write down questions, try them out and then improve on them with experience. You will become an expert negotiator when you master the art of asking the right questions.

3. Listen

Too many small business owners are anxious to start their sales presentation without even listening to what the customer is saying. When you listen to your customer’s needs, you are going to be able to create the perfect pitch every time.

4. Be Sure Of Your Audience

When negotiating face-to-face, your body language and your ability to interpret body language are critical. If a client seems to be getting uneasy as you are addressing their needs, then you might not be talking to a decision maker. Interpret that body language as an invitation to ask a different set of questions to find out the customer’s true intent.

5. Practice, Practice, Practice

The very best small business negotiators practice their approach every chance they get. Whether you are asking a colleague to do a role-playing session with you or you enjoy negotiating the cost of that cup of coffee we talked about earlier, constant practice helps you to enhance and reinforce your negotiating skills.

6. Know Your Subject

Doing plenty of research on your subject before you talk to your distributor or customer is critical to good negotiating. You should do as much research as possible and know the approach you want to take when you start your negotiations.

7. Radiate Confidence

You need to work on your body language to project confidence in your product and company, and you need to be sure you are projecting confidence over the phone as well. You can help your face-to-face negotiating skills by joining a public speaking group in your area that will give you the foundation you need for confident negotiations.

As for the phone, remember that there is plenty of truth to the notion that a smile can be heard over the phone. Stay positive in all situations and you will become an expert negotiator.

8. Be Knowledgeable

If you don’t know your business, then you cannot negotiate from a position of strength. Always be sure that you do research on products and services to know what you are talking about in any negotiation.

9. Be Reliable

If you have a customer waiting to speak to you, then don’t make them wait more than two minutes. If you make a meeting with a distributor, then be early. Being reliable enhances your professional image and gives you an advantage in negotiating.

10. Have A Goal In Mind

Even though you are trying to solve customer problems, you still need to have a goal in mind for every negotiation. Whether it is selling multiple units or not going below a certain price point, you need to have your goal in mind to have a successful negotiation.

Your negotiating skills will mean the difference between success or failure for your small business. If you don’t have any negotiating skills, then now is the time to develop them. If you have good negotiating skills, then now is the time to make them great.

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