The Art of Strategic Negotiation - Mastering the 5 Stages for Business Success!
- Native Advisors
- Jul 9, 2023
- 5 min read
Updated: Jul 10, 2023
By Vince DelaRosa, 07/09/2023
Unlocking the Power of Strategic Readiness, Engaging Dialogue, Value-driven Negotiations, Solidifying Agreements, and Continuous Growth in Business Negotiations.
How many times have you talked to associates about how the deal went that they were describing to you a month ago, and they inevitably respond with, "The talks fell apart, the deal went nowhere." Sometimes when I have probed further, one common thread has emerged, failed storytelling.
Lesson learned, how you communicate, and the sequence of events matters. Critical in early negotiations is telling the story, setting the stage, and making the offer clear.
This reminds me of Mr. Steve Jobs. In 1994, when he was the CEO of Pixar he said: “The most powerful person in the world is the storyteller. The storyteller sets the vision, values, and agenda...”
The same is true on some level in business. When done well, the story, the idea sets the stage, and ultimately shapes the deal guidance. The untapped power of these early discussions plays a pivotal role in negotiation which cannot be underestimated.
Turning early talks into strategic business alliances is an art form. Striking the delicate balance between friendship, verbal banter, and dealmaking takes a little bit of a structural approach.
Here are five stages of business negotiations to keep in mind.
1. Strategic Readiness: Setting the Foundation for Successful Negotiations.
Strategic readiness is vital to achieving successful negotiations. Before entering any negotiations, preparation is essential. We have seen circumstances where a business consultant packs their bags to go on a business trip but fails to pack a draft outline of what a deal could look like. That trip was nothing but a visit with zero results.
Remember, you are not just a deal maker; you are also a storyteller. To ensure the success of your business deals, it's essential to always come prepared. When attending early site visits or meetings, invest the time in creating a draft outline. There is first mover advantages to offer the first look of what could be a deal.
Tell the story of the deal. Remember, most of the time, you are going to be the one with the most ideas. If your business target had your ideas, they wouldn't need you!
Never miss the opportunity to get your ideas into your potential partner's hands. While it may not be the final proposal, it demonstrates to your potential partner that you have dedicated effort into developing the proposal and that you mean business. A draft outline serves as a trigger point, igniting the negotiation process. This also serves to leave behind your ideas when you leave, a quasi-marketing piece.
Always inform your proposal outline with extensive research on the other party's objectives and interests. This provides a solid foundation for your negotiation strategy. Incorporate in the draft what your counterpart may be interested in. Understanding their priorities enables you to align your approach and maximize value. Additionally, evaluating alternative options enhance your decision-making capabilities, ensuring you are well-prepared to navigate and successfully close negotiation processes.
2. Engaging Dialogue: Effective Information Exchange for Optimal Results.
Engaging in effective dialogue is a critical aspect of successful negotiations. During the opening and information exchange stage, making a positive first impression is key. Paying attention to your body language and communication style helps establish rapport and fosters productive conversation. Be careful with using jargon or lingo that may turn off perspective clients.
Ask open-ended questions, you gather valuable information in this manner, gaining insights into the motivations and position of the other party. This is critical especially after they have seen a draft proposal outline that you have prepared. Active listening and avoiding assumptions are essential to foster a collaborative atmosphere geared for optimal results.
3. Value-driven Negotiations: Maximizing Opportunities through Skillful Bargaining.
Value-driven negotiations focus on maximizing opportunities for all parties involved. While price may be a primary consideration, it is essential to consider other factors such as delivery times, overall value, and/or payments and fee terms. When you are outlining the business story, always point out the value (intrinsic and monetarily) of the deal on all levels.
It pays to think like Mr. Warren Buffett as you tell the story and negotiate. Spell out the value of what you are offering. In this diagram here, this regards stocks, but think of your business deals in a similar fashion.
It is clear, successful business transactions reside in offering something of value, which, in turn, generates greater revenue (profit) that surpasses the transaction costs. It is crucial to embed the core value proposition within your business storytelling. This approach holds significance because you are not always engaging directly with the check writer. Your story or deal proposal must effectively reach the authority, the check writer, with the value proposition at the forefront of their mind.
Tribes are a perfect business example of this. Most every business deal (M&A, VC, PE deals, ect.) where a tribe is involved, that deal easily outperforms any Wall Street metric, it is not even close. Tribes are an extreme example of both intrinsic and monetary value propositions. See here for some examples.
Skillful bargaining involves making offers and counteroffers aimed at achieving a mutually beneficial agreement. Connecting the dots for both sides is the core function.
By avoiding personalization of proposals, you keep the focus on finding common ground and creating value for both sides. A collaborative and principled approach can lead to successful outcomes that satisfy the interests of all parties involved.
A lot of times going after pain points or real solutions for your client or business associate, helps a new deal swiftly move from baseline discussions and negotiations into a signed deal.
4. Solidifying Agreements: Seamless Closure and Implementation for Success.
Solidifying agreements requires careful attention to the closing and implementation stage. It is crucial to ensure that all parties thoroughly understand the terms and conditions outlined in new business contracts.
Confirming satisfaction with the outcome and addressing any concerns or reservations before finalizing the deal is essential. By fostering clear communication and providing clarity on implementation responsibilities, you mitigate the risk of future conflicts or misunderstandings. A well-executed closure sets the stage for successful implementation and long-term success.
5. Continuous Growth: Refining Negotiation Skills for Ongoing Business Achievement.
In the realm of negotiation, continuous growth and improvement are vital for ongoing business achievement. You must embrace a mindset of constant development. This includes maintaining an open mind, staying well-prepared, and continuously refining your negotiation skills.
Thorough preparation, encompassing an understanding of objectives, costs, and desired outcomes is key. Equally important is ensuring that all individuals involved in the negotiation process are well-prepared and knowledgeable about the various stages and strategies. By continuously honing your negotiation skills, you position yourself for long-term success and the ability to navigate future negotiations with confidence.
Final Thoughts: Mastering the five stages of negotiation is crucial for achieving success. Strategic readiness, engaging dialogue, value-driven negotiations, solidifying agreements, and continuous growth are the cornerstones of effective negotiation. By applying these principles, you can enhance your negotiation skills and achieve favorable outcomes in all your business endeavors.
ADDITIONAL BUSINESS READING:
Vince DelaRosa is a former legislator for an American Indian tribe and the founder of Native Advisors.
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