Business Management / Culture

10 negotiation techniques every small business should master

Multiple Contributors

Updated: Dec 13, 2023 · 5 min read

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10 negotiation techniques every small business should master

Of all the skills needed to run a successful small business, negotiation skills are one of the most important. Oftentimes, people think negotiations are all about haggling, but there is truly an art to being a good negotiator.

Successful negotiations can help boost the bottom line of any business regardless of their industry. To learn more about what makes an effective negotiator, we sat down with 10 small business leaders and asked them what techniques they always have up their sleeves.

1. Follow the 20:10 Rule of Negotiation

“An easy negotiation technique is to follow the 20:10 rule. This rule simply states that you should ask for 20% off, and accept 10% off. This approach works because it ensures that you don't overstep in the negotiation and risk losing the deal at all. For example, on a $100 purchase, if you offer $20 or even $50, you will likely be considered as someone who isn't a serious buyer. On the other hand, $80 would generally be reasonable. The 20% anchor also provides simple math for the seller to respond, which will often be 10%. If you use this approach often, the gains accumulate over time.”

Michael Alexis, Teambuilding

2. Back up Your Pricing Value With Personality

“When working with a vendor or other contractor, ask for pricing first. Then state what you'd like to pay toward the beginning of the negotiation process. This allows you to back up your pricing value with character and personality, rather than feeling the need to go back and forth, not knowing when the process will end.”

Alex Azoury, Home Grounds

3. Act Like a Detective

“Anytime you approach a negotiation situation, you need to know that both parties have their own motivations. The more you know about the person on the other side of the table, the more you'll be able to figure out their motive. Once you know their motivations, you'll know how to convince them that the deal you're offering will help them achieve their goals as well as yours. You need to create a win-win situation. The more you know, the easier that will be.”

Phil Strazzulla, SelectSoftware Reviews

4. Use Tangible Data as Evidence

“Small businesses often get overlooked or have their validity minimized. When trying to negotiate, it is crucial for small business owners to use tangible data as evidence. Whether you are trying to negotiate a contract or any other sort of agreement, make sure that as a business owner, you have data or other examples that will show your company is good at what they do and deserves whatever you are trying to negotiate. People are more easily persuaded when they can see objective facts or numbers to back up what you are saying.”

Rex Murphy, Montauk Services

5. Use the BATNA Model

“Knowing and sticking to your walk-away point. The Harvard Negotiation Model calls it the ‘BATNA’ or ‘Best Alternative to a Negotiated Agreement’. It is easy to get caught in the back-and-forth of a negotiation and forgetting that the goal isn’t to make an agreement - it is to make a favorable agreement. Know what your bottom-line is before beginning negotiations, stick to it and be willing to end if your partner cannot meet those terms.”

Matthew Lee, Learning & Development Leader

6. Understand the “What’s In It for Me” on the Other Side

“All sides of a negotiation need to come out happy, feeling like they’ve ‘won’ somehow. I use this quite a bit when partnering with organizations to sell our Scaled Agile Certifications. Of course, it benefits me to have them promote our courses to their membership base, but I also need to make sure that we are providing a benefit to them and their members and/or customers.”

Debra Hildebrand, LurnAgile

7. Ensure They See Your Side of Things

“My top tip for negotiating is simple. Ask a variation of open-ended questions that make your opponent think about the situation from your perspective. By doing this, you force them to empathize with you, and oftentimes they end up giving you more than they originally planned!”

Nikitha Lokareddy, Markitors

8. Lay Everything on the Table

“Some people think that guarding information and not sharing the whole truth will aid in negotiations, when it's actually more beneficial to share the information you have to set a positive tone, which could lead to gaining an agreement. Being secretive does not give you leverage, being honest does.”

Carey Wilbur, Charter Capital

9. Turn to Your Network's Experience

“Turn to your network to see what incentives and requests they've won over the years, and which have failed. Other business owners in your niche likely have great advice on how to ask for better payment terms, bulk deals and other supplier incentives. You can learn from their mistakes.”

Ty Stewart, Simple Life Insure

10. Learn When to Walk Away

“Small business owners must be able to walk away. It doesn't sound like a hard thing to do, but I find more often than not, small business owners will take bad deals because they do not know how to walk away and say no thank you. It is sometimes difficult to prove your validity to an outside source because you are a small business owner and not a huge corporation, but that is when walking away comes in handy. You must stand up for the integrity and well-being of your business, big or small.”

Vicky Franko, Insura

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