Brush Up On Your Negotiating Terms To Capture A Small Windfall Quickly.
This week we’re taking a break from the process of building a business to understand what may be the most important skill-set in long-term business management. That is, the art of negotiation.
As a general rule, you’ll never make more money in shorter periods of time than you will by effectively negotiating. Take, for instance, the negotiation of a large piece of equipment or truck for your snow cone business. Effectively negotiating among several suppliers by utilizing sales price, delivery fees, warranty fees, servicing/maintenance fees, and buy-back terms, could save the business owner $20,000 or more in the first couple years of business (where cash flow is most critical).
Here are four thoughtful steps to preparing for a negotiation:
- Know the product/service and the cost to deliver or install throughout the supply chain. This will arm you with the knowledge you need to speak with authority on the subject and provide the information needed to determine what a great price would be for your target item.
- Know about the suppliers, seasonality, market share, and how aggressive each might be in selling you the target item in the time frame you’ve selected.
- Be prepared to negotiate throughout the cost chain – sales price may just be the beginning. Delivery fees, warranty fees, maintenance fees, in-house insurance, buy-backs for used equipment and other fees or costs should be included in your negotiation.
- Take notes of each conversation with each supplier, and add to the notes each time you talk so you can keep the conversation moving forward and honest.
- Learn to recognize a final offer. The term “deal fatigue” is real. Learn when the counterparty is worn out and unwilling to compromise further.
There are a vast number of negotiating seminars and books that can help you become a better dealmaker. Check them out, review the ratings, build your negotiating skills – you’ll never make more money faster.