Preparation Is the Key

PREPARATION IS THE true mark of the professional. Eighty percent of all negotiating success, if not more, is based on thorough preparation on your part before the first conversation takes place.
Begin by considering the subject matter: What are you going to talk about? What is the purpose of this negotiation? Define clearly what you want to achieve and what issues are on the table.
What are your objectives or goals for this negotiation? What do you want to accomplish when you go into this discussion? The greater clarity you have about your goals, the faster you will achieve them, and the easier it is to convey them to the other party.

Options Mean Freedom

Having options may be your best friend in getting the best deal in any negotiation. The more options you have, the freer you are to make the best decision. In a negotiation you are only as free as your well-developed options.
If you have not developed options in advance, your only choice in a negotiation is to agree with what the other party offers. Your hands are tied. But if you have a variety of options, or different ways that you can go, you will then have a great deal of strength, power, and bargaining leverage. Develop as many alternatives as possible well in advance, and on paper. Think them through carefully before the negotiation begins.

Continually Develop More Options

Do your homework and research to find other sources for the product or service under consideration. Find out what you should pay for it, and what the times and dates of delivery could be. With multiple options, you can go into a negotiation calm and relaxed, which allows you to leverage the power of indifference throughout the negotiation. When you have a series of well-developed options, you are completely free to accept or reject the terms and conditions of the other person. You will always get a better deal as a result.

Learn Everything You Can

One of the key parts of preparation is doing some homework on the people you are negotiating with. Today, the best tool for pre-call preparation is the Internet, especially Google. It is amazing how much you can find out with a couple of mouse clicks.
Often, you know someone else who has negotiated or done business with these people. Phone them, explain your situation, and ask for advice. Sometimes, one word of advice or insight can give you an advantage in the upcoming negotiation.

Make a Few Phone Calls

A friend of mine was considering purchasing a manufacturing company. This company had a line of products that would fit perfectly with his company. The owner of the other company was demanding several million dollars for his business, plus stiff terms and conditions after the purchase.

My friend called his banker and asked if he knew anyone at the bank of the other company owner. As usually happens, bankers know other bankers, and he phoned the banker of the person wanting to sell his company. He discovered, privately, that the company was in serious financial difficulty; if management did not find a purchaser or source of new finance within a few days, the company would be shut down by the bank.
With this piece of information, my friend was able to sit down with the demanding and blustery company owner and negotiate an extraordinarily good deal. He was able to buy the company for no money down, taking over the existing indebtedness, and pay out the owner over time with profits generated from the business.

Question Assumptions

Peter Drucker wrote that “errant assumptions lie at the root of every failure.”
Incorrect assumptions are one of the main reasons for disagreement and misunderstandings in a negotiation. Much of the time that is spent in a negotiation is taken up resolving incorrect assumptions of some kind.
Before you begin the negotiations, ask, “What are my assumptions?” More specifically: What are your obvious assumptions? What are your hidden assumptions? What are the obvious and hidden assumptions of the other party? Are your counterparties assuming that you really want to enter into this agreement? Are they assuming that you are indifferent, friendly, or hostile? Are they assuming that you are a good person or a difficult person to deal with?

Test Your Assumptions

Most of all, could your assumptions be wrong? What if they were? If your major assumptions going into this negotiation were wrong, how would you have to change your demands or position?
One of the assumptions we have when entering into a negotiation is that the other party actually wants to conclude a deal. Sometimes, this is not the case. Others may be negotiating with you only to improve their negotiating position with the party they really want to deal with. They simply want to negotiate with you to find out the best deal they can get before they make the deal they desire with someone else.
Therefore, think about how you can clarify each other’s assumptions before you get into the details of the negotiation.

Identify the Main Issues

Finally, in preparing for the negotiation, ask, What are the main issues? Where do we differ in wants or needs? What are the areas of conflict or disagreement? What details need to be discussed and resolved?
The more carefully you prepare in advance of a negotiation, the greater strength you will have, and the better the deal that you will get. The key to preparation is to do your homework. Get the facts. Get the real facts, not the assumed facts. Knowledge is power.