Business and Financial Negotiating
Financial and Business Negotiations
The driving rationale for devoting more attention to negotiations is usually to either reduce costs or solve serious problems. Among all the potential beneficiaries of better business negotiating, small businesses frequently have the most to gain for two reasons. First, small business owners often do not have enough time to formulate and apply negotiation strategies at all, so they are likely to realize at least some improvements when they add constructive negotiating efforts. Second, in any smaller organization, there are generally more candidates for improving financial negotiations because small businesses and organizations are historically "out-negotiated" by suppliers, utilities and other business partners. Any chance for smaller organizations to level the playing field should always receive serious attention.
Is Everything Really Negotiable?
The short answer is "Until proven otherwise, yes." Even for areas that seem rigid and fixed and therefore not worth negotiating, there is often flexibility lurking beneath the surface. It is worth remembering that negotiations involve two or more parties with different perspectives and goals and that these differing viewpoints are often in direct conflict with each other. It is therefore both a prudent and common-sense approach to not accept an opposing party's initial position that something is "not negotiable" without examining more closely.
Negotiating Equals Problem Solving
For small business owners contemplating how and when to improve their business negotiation strategies, here are some questions that deserve attention:
- What areas are usually the primary candidates for business and financial negotiating?
- Why do I need to find out what "full sticker price" is for services such as commercial loans from a bank?
- Can I really negotiate with a utility?
- Are credit card processing fees negotiable?
- Who and what do I need to avoid when negotiating with a bank?
Asking questions is a prudent starting point for any process involving uncertain territory. Perfection is not necessary because it is desirable for one question to lead to another. When in doubt, it might be helpful to recall that the "Socratic Method" is built upon asking and answering questions as a critical step in gaining knowledge. If you need help in formulating the right questions, here is an excellent book for guiding and coaching you. As noted by management guru Peter Drucker, "The most serious mistakes are not being made as a result of wrong answers.The true dangerous thing is asking the wrong question."
Asking Questions About Negotiations and Full Sticker Price
As noted above, one of the two primary reasons for pursuing better negotiation strategies is to reduce costs. Perhaps the single most critical piece of the puzzle in accomplishing this is to know with some precision what the overall cost and pricing structure looks like. It is now accepted wisdom to avoid paying "full sticker price" when buying a car. But for many years, what was generally missing was cost data that would reveal how low an automobile dealer could price the vehicle and still make a profit. This data is now readily available, and it has forever changed the negotiating process for car buyers.
For business services and products, it is helpful and advisable to know both "full sticker price" as well as the true "bottom line price" that a provider such as a bank or utility will accept. Unlike the car illustration in the preceding paragraph, it is often difficult to accurately determine what "full sticker price" is in some cases. For example, because many banks have experienced operating losses during the past several years, their starting point for negotiations can be higher than "full sticker price." Banks have no doubt learned from jewelers and antique dealers and other retailers who routinely price their products artificially high in order to provide "negotiating room" for price reductions. Bankers doing the same thing can effectively offer what seems to be a generous reduction in their loan fees but with the borrower still paying "full sticker price" even after the "discount."
You should expect to need expert help as you proceed along the pathway to negotiating success. Even for skilled negotiators, the skills needed to negotiate effectively are rarely acquired easily. Small businesses can level the playing field when they are at a disadvantage by focusing on financial and business negotiating. This can be especially helpful when dealing with banks. What is equally important to realize is that many small business owners lack either the time or skills to achieve effective negotiations. In other words, be prepared to ask for help. If you need help with negotiating, Roger Dawson’s book is a superb place to start. As Roger Dawson so astutely observed, "You will never make more money than when you are negotiating."
Negotiations for a More Successful Military Career Transition
In yet another everyday example of where more effective negotiating skills can be helpful, the goal of a successful transition from military service to a new business career has proven to be difficult for many individuals. Unfortunately, there are many problem areas to be avoided during this process. The need for specialized help from a variety of career transition mentors and others should be anticipated by military personnel as they move forward to their next career. Returning to the primary topic at hand (negotiating), there are many career decision points during both military and civilian career transitions that will benefit from improved negotiation skills.
As I mentioned in the first few sentences of this article, one of the primary reasons for using negotiating strategies is to solve serious problems. A career transition from military service to a business and civilian career is one of those stubborn and recurring problems.
The key lesson to be learned is the integral role played by effective (or ineffective) negotiating. The choice is up to you — do you want to do a better job of negotiating when it comes to your career as well as other daily decisions?
Yes, Everything Is Negotiable
While the point was also made above, it is worth repeating because of the critical importance in conveying just how much of an impact business and financial negotiating can have:
Everything Is Negotiable
Never cut what you can untie.— Joseph Joubert
© 2012 Stephen Bush