There are a few things in this world that I will confidently declare being really good at without a doubt. One of them is “negotiating”. If you know me very well, you’ll know exactly which type of negotiating I really suck at. However, this article is about the negotiating that I’m “the God Father” level at negotiating from a buyer’s point of view. What can I say, I like a good bargain. All of what I will share are tactics that I learned firsthand through my own experiences. One of my latest negotiating efforts led to me getting an almost 50% discount on real estate, with an amazing payment plan. Additionally, upon completion of payments by installments, the seller gifted me a little more land out of nowhere because he wholeheartedly wanted to. This demonstrated to me that he and I really considered this a win-win scenario. Anyway…
Some suggestions are those that I learned from other people and resources. However, all are tips I found that work, first-hand.
Before we delve into these tips and tactics, if it’s not obvious why an entrepreneur needs to be good at negotiating, here is the main reason:
Cash flow is often an issue: it’s been said over and over again. If you can negotiate the amount of money you spend on any significant expenditure, it helps towards regulating that cash flow. Discounts and flexibility in payment options help you stretch your money and other resources somehow. Being good or bad at negotiating when your money is on the line could really be one of the reasons why you sink or swim. For example, you have suppliers, financial service providers, contractors and sub-contractors who you need to work with. All this means money out. Negotiating terms and amount really can make the difference towards your business’s financial health. Your goal has to always be staying financially liquid so you can do the needful every single time.
Before we assume that negotiating is this super obvious thing: let’s just break it down for a second. Person A wants what person B has. Person B is willing to part with it for a fee. These two discuss the fee and make the necessary transaction. A perfectly logical process, right?
Think again: it kind of isn’t. In fact, according to research, our decisions are underpinned with a level of emotion no matter how logical the decision-making process is or appears to be. Don’t believe me?
Here’s what neurologists found out (full article here: https://bigthink.com/experts-corner/decisions-are-emotional-not-logical-the-neuroscience-behind-decision-making ):
“A few years ago, neuroscientist Antonio Damasio made a groundbreaking discovery. He studied people with damage in the part of the brain where emotions are generated. He found that they seemed normal, except that they were not able to feel emotions. But they all had something peculiar in common: they couldn’t make decisions. They could describe what they should be doing in logical terms, yet they found it very difficult to make even simple decisions, such as what to eat. Many decisions have pros and cons on both sides — shall I have the chicken or the turkey? With no rational way to decide, these test subjects were unable to arrive at a decision.
So at the point of decision, emotions are very important for choosing. In fact, even with what we believe are logical decisions, the very point of choice is arguably always based on emotion…
This finding has enormous implications for negotiation professionals. What the negotiator can and must do, however, is create a vision for the other side to bring about discovery and decision on their part. In the end, your opponent will make the decision because he wants to.”
Therefore, based on the research above, if you have well developed soft skills you may find that you are somewhat naturally good at negotiating. Empathy can go a long way here.
That being said, here are those tips and tactics I live by:
- Do your research:
At the very least know what an acceptable selling price is for what you are trying to buy. The seller’s motivations for selling are also very important to know. For example, in the land purchase statement I made above, in that scenario, the seller had a very immediate emergency that he needed the finances for. This information that they gave me helped me make a more compelling argument. I had to appeal to “his” needs and the immediacy of a willing payer to address those needs.
- Go in armed with that knowledge:
Your information from the research you made should help you be more intentional about the offer you make the seller. At this point, you should know what you are willing to pay. However, what you are willing to pay should not be the first or only amount you tell them. You should begin with the amount that’s lower than the amount you can afford to pay. This leaves wiggle room for both of you.
- Clearly express what you are willing to pay:
if you need room for installments, clearly articulate that as well. Don’t be embarrassed to say what you can afford (and what terms would work for you). It is easy to feel embarrassed if you know that the offer you are making is significantly lower than usual BUT all you can afford. State your offer anyway. The worst that can happen is hearing a “NO” and a no cannot kill you.
- Be willing to walk away:
When you go in with no desperation and a controlled desire for what you want, you go in empowered. You may have heard it said that people can smell “desperation”. Desperation puts you at a disadvantage. Go in with the feeling that you are willing to walk away if you cannot reach a mutually agreeable conclusion. It will not be the end of the world, it never is. That being said, if it does happen that you feel inclined to walk away, walk away and look for a better offer elsewhere. On more than one occasion, I’ve found seller’s changing their minds at the point of my walking away. There is no guarantee that this will happen for you but can sometimes.
- What can you negotiate:
Selling price (discounts/waivers etc)
Terms (number of installments, percentages of payment per installment etc)
- Realize that almost everything is negotiable:
Often times, it is just a matter of asking. Honestly, it is good practice never to take things of this nature at face value. For example, I recently applied to some universities for an MBA. I asked them if the 6 month internship period was necessary since it would cost me significantly more if I accepted the offer. Turned out that it was actually negotiable. When they removed it, the financial difference was significant.
- Empathize (to a degree) with the seller:
Acknowledge the value. From an emotional perspective, this is a huge factor. If the seller does not feel you significantly value what you are trying to purchase, it may compel them (at an emotional level) to make a decision you do not want. Therefore, express that you understand the item is valuable, acknowledge that you know the selling price is “fair” (if it’s fair). It is also a good idea to communicate to them the features about the item that you see value in, specifying these good points helps drive home the point that you are being genuine. Express that any discount you want is not coming from your perceived value of the item but rather stemming from your ability to pay for it. People need to feel that what they are selling is perceived as valuable. If they sense that you do not appreciate that, this can negatively impact your agenda. Whilst we are still on the concept of empathy:
Don’t low ball: know when you about to “overdo” it and don’t. The goal is to leave everyone happy enough that if there’s a next time, the positive previous experience leaves them feeling receptive to future business dealings with you.
- Communicate delicately the negative aspects of the product or service you are negotiating over:
This requires grace and tact. The point is to express this without coming of us unappreciative of its value but rather as an honest attempt at conveying the cons of your potential purchase in a respectful manner.
- Don’t negotiate when you are hungry or tired:
Make sure your hunger and thirst are quenched before you enter any negotiations. This is actually ancient wisdom going back to Bible times (if you’re religious). There is no worse negotiation story in the Bible than the one with those two brothers. One brother (Esau) sold his birthrights to his other brother (Jacob) for a bowl of soup when he was extremely hungry. Apparently the hunger warped his perception of value. Now, if you aren’t religious, you may prefer what this Harvard Business school article has to say:
“…the study’s results suggest that, as hungry as we might be to make a deal, literally feeling hungry during an important negotiation could lead us to behave unethically and selfishly. … In addition, any “hunger gains” achieved during a negotiation could backfire in the long term if our sense of entitlement leads others to view us as dishonest and uncooperative.”
- Dress reflecting the seller’s dressing:
Dress at the same level as the seller. According to Inc.com, dressing more formally creates “social distance”. People from the banking sector are actually taught how to navigate this appropriately. Essentially, the idea is, if the seller is likely to show up dressed in business casual attire, so should you. Do not show up in your “Sunday bests” because apparently at a psychological level your presentation sends a message to them that works against you. Your goal should be to disarm the other party: demonstrate by your attire that you are “all at the same level”.
- Emphasize the cash (and right now) payment — if that’s the case:
The idea of losing out is a big push and pull factor. Stating you have the cash in hand (if you have it), can seriously help you get what you want and what the seller wants faster. “Immediacy” or “convenience” is valuable. After all: we pay for convenience each day, one way or another. Usually, cash in hand is a lot better than none.
- Document important details (Especially for negotiations that are not concluded in one sitting):
If you are not done negotiating for that day, make sure you document your discussions (take physical notes). This is pretty obvious in formal settings but not so much in informal business dealings. Details can easily be forgotten and people may feel inclined to backtrack on their decisions.
- Close the deal fast:
The longer it takes, the harder it’s going to be. Since you are probably not negotiating a peace agreement at the Gaza strip, it is ideal you do this fast, especially since it is a selling agreement. Remember that if you saw value in this product or service, someone else may have too and they may come with an offer you can’t afford or do not want to make.
That’s all I have to share with you on this topic, what are your thoughts? What works for you? Please share your thoughts and comments below.
Want to discover more about Maclean Mbepula? Find her on Linkedin or here on Medium. She’s written 3 books (one in entrepreneurship from a grassroots perspective (“Challenge Accepted) and 2 poetry books which are available for purchase on Amazon or you can sign up and get the kindle versions 100% FREE.