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Reasons to Start High in Negotiation in Business

First impressions are very important, and a good start in your business negotiations is very important whenever you want to make an agreement. Bear in mind that the first offer should be based on the best-case scenario, and should always be supported by a good justification. If you want to win a negotiation, you have to figure out what the other participant needs. Asking repeated questions can sometimes turn out to be a good technique.

First time you have to deal with a negotiation

If it’s the first time you have to deal with a negotiation, the opening moments are the scariest ones, especially if you’re negotiating with a person who has different perspectives.

There are three main questions you should ask yourself before announcing your opening offer. First of all, you should ask yourself whether you’re right making the first offer, whether it should be high or low (depending on whether you’re exporting or importing), and what is the right thing to do if your offer ends up being rejected.

Some negotiators may advise you to let the other person start the discussion, while others may tell you that once you make the first offer, you obtain a tactical advantage. However, every skilled negotiator knows that a favorable atmosphere is very important in these situations. Besides, first impressions are very important and aren’t easily changed, especially if they’re negative. The human nature is known for having stronger reactions when it comes to bad impressions, and they also last longer. As a result, you should always pay attention when you formulate an opening statement.

If you want your negotiation to be fruitful, you should create a clear and positive opening offer that implies flexibility, promotes goodwill, focuses on mutual benefits, creates interest and demonstrates confidence.

 

Understanding what the other participant needs

Make sure you identify both your needs and the participant’s needs, and always emphasize the number of mutual benefits obtained in case you reach an agreement. The other party can ask you to support your offer by providing a justification, so you should be prepared for this type of situations. However, bear in mind that most of the times, negotiators who start with higher aspirations end up having better results than those who start with modest goals. The best option is to make a low offer if you’re a buyer and a high one if you’re a seller.

In case you’re thinking of making the first offer, you should know that this will offer you a tactical advantage, because you implicitly set up an anchor point or reference. Once you’ve made your offer, the other side can either ask you for a counter-offer or simply reject it. Besides, the other participant can adjust its limits of acceptance based on your opening offer. Bear in mind that you shouldn’t make the first offer unless you are familiar with that certain market. Not knowing many things about the current market can sometimes lead to underestimations, in which case your offer will end up being more profitable for the other participant than for you.

As far as the value of the offer is concerned, you can opt for a high offer, as long as you can provide a justification for its level. Low offers are made by negotiators whose goal is to be invited to many negotiations rather than getting the business. In case you’re dealing with a strong competition, you are advised to make offers similar to theirs.  However, low offers can help you secure business with famous global companies. This method will help your business get deals with popular companies, and although your negotiator skills won’t be much appreciated, you will see immediate profits.

In case your first offer isn’t accepted by the other participant, you should keep your optimism. Most of the times, rejections help negotiations become successful, so there’s no use in embracing a defensive attitude. Many good negotiators know how to obtain an opportunity out of a rejection, without having to make many concessions. Before starting to justify your proposal, you should ask the other side what part of the offer is acceptable. This way you can present your offer once again, this time focusing on the parts that the other participant finds attractive. There are some tricks you can use: for example, if they reject your offer for being too expensive, you can ask them what they mean by “too expensive”, or you can discover what parts they find acceptable and why. Don’t lower your price unless you know exactly what the other participants need. Besides, you should always keep in mind that if your offer was indeed to expensive, they wouldn’t be spending their time talking to you.

Each negotiation is different, and only by dealing with a large number of companies you can gain the skills needed in order to become a good negotiator. Everybody has to start somewhere.

Author Bio: Davis Miller is co editor at the site http://www.thegappartnership.com.hk/, a site for negotiation workshops which are available in 12 languages in over 50 countries.  He is also an experienced writer with great knowledge.

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