In business negotiations, there are winners and losers and you always want to come out on top. Or at least, that’s what they told you. In reality, negotiations shouldn’t have winners and losers. There is only one relevant metric to measure how successful a negotiation in business was: how happy are both parties? That’s not to say you shouldn’t have a strong negotiation strategy in place. But there is a middle ground to be walked, so finding the best negotiation strategies to help you seal the deal and keep both parties happy is of the utmost importance.
What Are Negotiation Skills?
Negotiation skills are the abilities that let you reach an agreement both sides can live with: preparation, active listening, clear communication, emotional control, problem solving and knowing when to walk away, and they matter for career advancement and conflict resolution. They’re learned rather than innate, and they apply in everyday life as much as in business settings, from a supplier conversation or a pay review to personal situations.
The single biggest determinant of how a negotiation goes is what you did before you walked in.
Defeating The Old Business Negotiation Myth
The idea that in business negotiations there will always be winners and losers is outdated, and heading into any negotiation with this notion is a surefire way to ensure that your negotiation will be unsuccessful.
As a business owner you’ll have no doubt entered negotiations with people like this in the past. And we can almost guarantee you found the whole process frustrating and unproductive.
That’s because if you enter a negotiation with the idea that you have to win and the other person has to lose, you effectively turn your negotiation into a stubborn explanation of why it’s your way or no way. And that will lead to the other party walking away because they weren’t listened to and their perspective was never taken into account.
Essentially, seeing a negotiation in such simple terms as winners and losers means you’re no longer negotiating at all. A negotiation is a discussion, a sharing of ideas, aimed to achieve a mutually agreeable outcome, with a successful conclusion for both parties. Try to walk all over the other party, and they’ll walk out the door.
There are names for these two approaches. Distributive negotiation treats the deal as a fixed pie: every pound you gain is a pound they lose, so the only question is who gets the bigger slice. Integrative negotiation looks for ways to make the pie bigger, by finding the things that are cheap for you to give and valuable for them to receive, and vice versa. It treats negotiation as problem-solving, focused on finding creative options that satisfy both sides and support a win-win result.
Almost every business negotiation has integrative potential in it, because the two sides rarely value everything identically. Payment terms, delivery timescales, contract length, exclusivity and volume commitments are all tradeable, and a deal that looks deadlocked on price often isn’t.
So, with that first negotiation strategy in mind, removing the idea of winners and losers, it’s time to look at other strategies to make your negotiations more successful.
1. Know Your Dream Outcome
Just because good negotiation involves compromise doesn’t mean you shouldn’t know what the perfect scenario for your business would look like. Of course, the likelihood of this happening is slim, because it’s essentially asking yourself: “What would the ideal outcome of this negotiation be for my business if my negotiation partner simply sat and agreed with everything I said?” In that planning stage, decide the form of your position and set an opening offer that leaves room to negotiate without undermining your credibility. Because the first number often anchors the discussion, amateur negotiators who start too low can weaken their position from the outset.
It probably won’t happen, but it’s important for you to outline what this outcome would be. That way, you can start to better understand your position before entering the negotiation.
2. Consider Their Dream Outcome
If knowing your dream outcome will help you better understand your position before negotiations begin, then it follows that knowing your negotiation partner’s dream outcome will help you better understand theirs. Ask yourself: “What would their ideal outcome be for their business if I sat and agreed to all of their terms?” It will help you understand how they might enter the negotiation. Then separate their stated position from the interests underneath it to identify what they actually want.
Unless both of your dream outcomes are exactly the same, this dream outcome won’t happen either. But being prepared for a negotiation means knowing both what you want and what they want. That level of understanding helps reveal underlying motivations and possible solutions.
Once you know both, you can work out the ZOPA, or zone of possible agreement: the range between the worst deal you’d accept and the worst deal they’d accept. If those ranges overlap, a deal exists somewhere in the gap. If they don’t overlap at all, no amount of skilled negotiating will produce one, and the useful thing is to find that out early rather than after three months of meetings.
3. Create ‘Plan B’ Scenarios
As a business owner, you’ll be used to creating ‘plan B’ scenarios. It’s good preparation for when things don’t go precisely the way you had hoped, and it’s the mark of a good business. And the same applies to negotiations.
Now that you know your dream outcome and their dream outcome, before you even enter negotiations you should know which ‘plan B’ scenarios that satisfy both of your wants you would be happy with. As a first step, successful negotiators map critical elements before the meeting, including fallback terms, margins, and clear discount limits set in advance. That way, you can better enter the negotiation with an outcome in mind that still leaves you happy at the end of it. Failing to do this could mean you’re led astray by your negotiation partner.
This has a formal name worth knowing: your BATNA, or best alternative to a negotiated agreement. The term comes from Roger Fisher and William Ury’s Getting to Yes, and it’s the single most useful concept in negotiation.
Your BATNA is what happens if you don’t do this deal at all. Another supplier. Keeping the work in-house. Walking away and spending the money elsewhere. Whatever it is, it sets the floor: you should never accept a deal that leaves you worse off than your BATNA, and the stronger your BATNA, the less pressure you’re under.
Which is why the most valuable work in a negotiation often happens outside the room. Improving your alternatives before you sit down, by getting a second quote or lining up another buyer, changes your position far more than any tactic you use once you’re there, and it helps you define your limits in advance before talks begin.
4. Discuss The Negotiation Process
Another good negotiation strategy to help you seal the deal is ironing out the details of the negotiation itself. Discussing:
- How it will take place: online, in person, over the phone
- Where it will take place
- When it will take place
- Who will facilitate the process
- What ground rules will be in place
- Who will be involved and at what points
- What main points need to be discussed in each meeting
These are the key stages or checkpoints that shape the entire negotiation process.
All of this will help both parties prepare for the negotiation. Failing to do this can lead to lengthy negotiations that never seem to reach any positive conclusions.
5. Set Realistic Deadlines
In a similar vein, you’ll also need to discuss with your negotiation partner some realistic deadlines, and then ensure both parties stick to them. Bear in mind that any deadlines you set should allow both parties time to discuss the results of each negotiation with the relevant people before signing on the dotted line, so to speak.
Make sure the process doesn’t drag out too long, though. In business you can always use more time, but a deadline helps speed up the process and ensure both parties can set realistic expectations.
6. Know Your Competitor
Perhaps the most important part of any negotiation strategy is research. Before you enter the room with the other party, you ought to know as much about them as possible. Yes, this involves their dream outcome, but it also involves their business values and aims.
This information will prove vital in informing how you negotiate. If you know your negotiation partner then you can set out more clearly how working with your business can benefit them and align with their business values and aims.
7. Know Your Non-Negotiables
Just because you’re heading into the negotiation with greater flexibility doesn’t mean you ought to head into it ready to concede to all of the other party’s points. Having your non-negotiables clearly laid out in your mind ahead of the negotiation means you won’t compromise on the areas that are most important to your business.
Don’t share these with your negotiation partner until absolutely necessary. You have more chance of reaching a compromise naturally. Saying something is non-negotiable before the negotiation even begins could make you seem like someone who isn’t capable of negotiating at all.
It’s worth separating two things here. Your non-negotiables are the terms you genuinely cannot move on. Your opening position is where you start. Confusing the two is how negotiations deadlock over things neither side actually cared much about. Clear limits also help establish a credible position before talks begin.
8. Think Body Language
In business negotiations, confidence is most of the battle. Walking into the room and letting your body tell the other party that you’re prepared is vital. Shoulders back. Head up. Open and willing for discussion. These are all important signs you ought to be giving off when you enter a room for a negotiation.
And if you aren’t feeling particularly confident, fake it. Truly, more business owners than you realise get nervous before negotiations, especially when the outcome matters to business operations and growth going forward. But by simply pretending to be confident, you’ll carry yourself in a much more convincing way.
9. Use Their Ideas In Your Words
This is one of the most persuasive things you can do in a negotiation. It’s important that you take the time to sum up their ideas, but using your own words, because active listening means noticing both what they say and the emotion behind it. That’s not to say you’ll claim they said things they never did. That’s unethical and it will only serve to irritate the other party.
But if you’re able to paraphrase their key ideas in your own words then you’ll be able to get them to agree with you. Do this early and you’ll have already set yourself up as a person who listens to their ideas and understands them, and, crucially, make yourself somebody they can agree with. And if they can agree with you on one thing, they can agree with you on others. Clear communication also helps you influence the discussion: state your points plainly and ask open-ended questions so the other side keeps talking.
This is where the often-quoted 70/30 rule comes in: spend roughly 70% of a negotiation listening and 30% talking. Most people do the reverse, and lose information they could have used. Every minute the other side spends explaining their position is a minute you spend learning what they actually need, as opposed to what they opened with.
10. Be Patient
Patience is everything in a negotiation. Expect some pushback on your ideas, and remember that patience is most crucial when emotions rise, pressure increases, and they need time to mull things over and discuss your propositions. After all, they have to make sure this deal is just as beneficial to their business as you hope it will be for yours.
Patience shows that you’re a calm and collected negotiator. It shows you’re in control and you’re used to the negotiation process, and therefore you’re somebody they can follow. Emotions can shape the outcome, so staying calm protects your judgment.
11. Build Rapport
Yes, the main reason the two parties are even negotiating is because there is a potential deal at the end of it that benefits both businesses, but that doesn’t mean you can’t get friendly throughout the process and build a rapport. It is also easier to protect long term relationships when disagreements are tied to objective criteria instead of personal preference.
People are far more likely to do deals with those they like and trust, and the best negotiations happen in comfortable environments where both parties feel they can bring ideas to the table. Listen to these ideas and be respectful, ask open-ended questions early to build trust with the client, and use effective communication to articulate your points clearly. The key to a successful negotiation strategy is being able to be kind to the people and strong on the terms of any deal.
That phrasing is deliberate, and it’s the central idea of Getting to Yes: separate the people from the problem. Being hard on a term is not the same as being hard on the person sitting opposite you, and negotiators who confuse the two tend to win arguments and lose deals.
12. Take Breaks
Taking breaks is important in any negotiation. It gives you the necessary break from the other party whilst the meeting is adjourned, meaning you can sit with your team and discuss progress, and maybe even get ideas from those around you on how you might proceed to a successful business deal.
Negotiations that build in breaks tend to move faster than those where both sides try to power through, because tired people dig in rather than think. Frustrations rise without regular breaks, so take them to keep a clear head and move towards sealing the deal quicker. Use that pause to reflect on what has worked so far, adjust your approach, and learn from the experience.
13. Use Your Team
You should be using your team for ideas, of course, but you should also use them in the negotiations themselves. They’ll notice things you don’t, have ideas you don’t, and help strengthen your case to the other party.
And don’t be afraid to mix up the line-up in the negotiation. The more options you have on your team the better. Different members might be better placed to negotiate different aspects of the deal, and they’ll also have different ideas to share with you afterwards. They can also help prepare multiple equivalent offers, one of the most useful tools for revealing preferences without direct questions and testing what matters most to the other side. When setting out the negotiation process, think about which members of your team will be most useful and when, and let the other party know who to expect in each meeting.
14. Bring In Impartial Third Parties
Sometimes negotiations can prove more difficult than either party expected. In these cases, don’t be afraid to suggest using an impartial third party to help move negotiations along.
Find another person the two parties trust, and have them sit in on the meeting and sum up both of your ideas. You may find a deal can be struck when it’s summed up by someone else. They can be especially useful when conflict escalates and both sides need help resetting the discussion.
15. Be Ready To Walk Away
You should never enter a negotiation with one foot out of the door. But you absolutely should be willing to walk away if a deal can’t be struck, otherwise you’ll end up making compromises to make the deal happen that you won’t be happy with.
As a business owner you’ll be used to making hard decisions, and one hard decision you might be forced to make is walking away from the table when negotiations are not proving useful to either of you. After all, the sooner you stop this negotiation, the sooner you can start negotiations with another business that aligns more with your goals.
This is your BATNA doing its job. If the deal on the table is worse than your best alternative, walking away isn’t a failure of negotiation. With planning, strategy, and effective communication, knowing when to leave the table is part of reaching a successful outcome.
The Five Stages Of The Entire Negotiation Process
Most negotiations, however informal, move through the same sequence:
- Preparation – working out your objectives, your BATNA, their likely position and the ZOPA
- Exchanging information – both sides set out what they want and, more usefully, why
- Bargaining – proposals, counter-proposals and trades
- Closing – agreeing terms and confirming both sides understand them identically
- Implementation – putting the agreement into practice, which is where badly drafted deals unravel
People often develop these stages faster through role-play, and practicing them in sequence helps embed new skills and improve effectiveness.
The stage people skip is the first one, and it’s the one that decides the outcome.
Negotiation Strategies For Successful Negotiation: Conclusion
Having a good negotiation strategy essentially means you are. Here are a few practical tips:
- Well prepared
- Clear on both of your goals
- Clear on the process
- Willing to listen to your negotiation partner’s perspective
- Ready to communicate effectively
- Willing to try something new
- Prepared for success and failure
The best negotiation strategy is one where you can be firm on the things that are really important to you and your business, but flexible on things that may mean more to your negotiation partner than they do to you.
Remember, importantly, if both parties walk away from the process happy, then it’s been a success. It isn’t about winners and losers, one party getting their dream scenario and the other being left with nothing. It’s about compromise and building rapport.
Learning the art of negotiation is a crucial skill in business and in life, and the more you practise it, the more confidence you build over time. Get this right and you’ll be giving your business an edge on the competition, and setting yourself apart as a business owner that others can have successful negotiations with. That sort of reputation is invaluable in business.
Frequently Asked Questions
What are negotiation skills?
The abilities that let you reach an agreement both sides can live with: preparation, active listening, clear communication, emotional control, problem solving and knowing when to walk away. They can be learned, and preparation matters more than personality.
What are the five negotiation skills?
Short lists vary, but the five that appear most consistently are preparation, active listening, clear communication, emotional control and the willingness to walk away. There’s no single official set.
What are the five C’s of negotiation?
Usually given as clarity, confidence, creativity, consistency and communication. Like most negotiation acronyms it isn’t defined by a single authority, so treat it as a memory aid rather than a rule.
What is the 70/30 rule in negotiation?
Spend around 70% of the time listening and 30% talking. The reasoning is that information wins negotiations, and you only gather it while the other side is speaking.
What is a BATNA?
Your best alternative to a negotiated agreement: what you’ll do if this deal doesn’t happen. The term comes from Fisher and Ury’s Getting to Yes. It sets the minimum you should accept, and improving it before you negotiate strengthens your position more than any tactic used at the table.
What is ZOPA in negotiation?
The zone of possible agreement: the overlap between the range of deals you’d accept and the range they’d accept. If there’s no overlap, there’s no deal to be found, however well you negotiate.
What’s the difference between distributive and integrative negotiation?
Distributive treats the deal as a fixed amount to be divided, so one side’s gain is the other’s loss. Integrative looks for trades that make both sides better off, usually by finding terms that are cheap for one party to give and valuable for the other to receive. Often, that means trading concessions that are low cost for you but high value for the other side, with a clear view of the real cost on your end.
How do you negotiate when you have less power?
Improve your alternatives before you start, so you’re less dependent on this particular deal. Then focus the conversation on interests rather than positions, since a smaller party often has something the larger one genuinely wants, such as speed, flexibility or specialist knowledge.
