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How to Establish & Conduct successful business relations

Updated on February 10, 2011

This article is comprised of study notes used in relation to a business relations module in a Diploma of Hospitality Management. It is 100% original and all information comes from a variety of reliable Australian TAFE (Technical and Further Education) sources.

The goal is to provide an understanding of what business relations are and how to conduct them appropriately. I hope that this assists both students and small business owners alike.

Key Elements of Business Relations

  • Researching potential business agreements; investigate arrangements with suppliers, partners and customers.
  • Be thoroughly prepared
  • Maintaining an emotional distance
  • Have a cross cultural awareness of sensitivities and implications of certain behaviour
  • Effective verbal and non-verbal communication skills.
  • Social / professional Networking
  • Informal gatherings, get togethers and social events.


It is very important to maintain contacts and good relationships within the business community.

Networking can help to extend your influence as a business. Its essentially free advertisement. It allows you to create a positive image for your your business in the community. It also provides greater access to information, which in turn assists with marketing strategies.

To be good at networking;

  • attend functions
  • attend informal gatherings
  • host and attend seminars
  • join social networking sites such as Facebook and Twitter
  • Join an industry group
  • Join associations
  • establish regular contacts with similar outside organisations
  • Stay in regular contact with your networks via newsletters and emails.

In the world of today, the internet is your greatest networking tool. There are so many forums, websites, groups and programs you can join for free. That's the greatest part about it. All it takes is a bit of time and thought and in return you gain a whole lot of new professional friends and advertisement.

Developing Customer Relations

This involves more than just providing good customer service.

Relations can be nurtured using the following strategies.:

Good database management: Collect information from you customers. Create memberships to your different establishments. This way you gain information for marketing while building a rapport with your customers so they keep coming back. Provide incentives for loyalty. You would be amazed at how effective something as simple as the "buy 10 get one free" card can be in gaining sales. Keep your database of customer information confidential and well organised. Use it to create statistics for use with marketing strategies.

Provision of regular newsletters: Newsletters will help to remind people that you are still around and worth doing business with. This is the perfect place to promote your latest deals or products.

An effective system for complaints: It is important to keep customers happy, even in the odd case where it costs you money. Word of mouth occurs whether you want it to or not. Unfortunately negative new spreads faster than positive news. As a result, having a customer leave your establishment unsatisfied can have a very negative effect on your reputation. Customer complaints should be taken seriously and followed up.

A customer feedback system: If you do not know how the community views you, then you cannot effectively improve you products and services. You need a regular and reliable way of hearing your customers views.

The Three Roles of a Manager

  • Interpersonal: Networking, meetings, social events. Gathering macro environment information.
  • Informational: Understanding the information.
  • Decisional: Using the information.

Strategies for Developing Business Contacts

  • Establishing formal and informal feedback and information exchange

  • Develop a database on the relationship addressing needs, likes, dislikes and personal details

  • Establishing a proactive, regular approach to maintaining contact with then correct person in relation to the business matter.

  • Avoid conflict by addressing positive and negative issues

  • Ensure mutual satisfaction when resolving issues

  • Attend social interactions

  • Consider the provision of gifts within an ethical framework

How to Arrange a Meeting

  • Establish name and title plus contact details

  • Arrange a meeting by phone then follow up via email / letter / fax

  • When initiating you would outline the objectives of the meeting and how much of their time you would need

  • Dress appropriately and professionally

  • Offer some sort of refreshment

  • Greet with a hand shake and title or name if you know them personally

  • Exchange business cards if it is your first meeting

  • Begin with small talk, then get down to business

Ethics in Relation to Business Relations

Ethics are an understanding of what is considered to be right or wrong, good or bad. It's a question of what a person should do in accordance with a certain context. You need to be aware of according rules such as;

  • the laws of the land
  • the expectations of the society
  • principles of morality
  • the policies of collaborating organisations
  • Consideration of general concerns such as other peoples needs and fairness.

Some examples of ethical questions are:

  • is it legal?
  • who might it hurt?
  • would I like the same thing to happen to me?
  • am I being honest?
  • can I live with myself if I do this?
  • would I like my mother to see me doing this?
  • would I publicise my decision?
  • would I be comfortable if it appeared on the pront page of a newspaper or on TV?
  • What would be the consequences if everyone did it?


What is a negotiation?

Negotiating is the process of reaching a mutual agreement. It is used to resolve conflict, change relationships, influence behaviour and achieve common goals.

Some examples where negotiation often occurs

  • Purchasing a car
  • Shopping at street markets
  • Dealing with neighbours 

Skills required for negotiating

  • Be prepared. Before conducting negotiations, sit down and work out what you want, what you are willing to give in return and what you need. Set your limits and goals.

  • Maintain an emotional distance. Do not allow your feelings to interfere with the end result. For example; do not end negotiations because you feel insulted.

  • Excellent communication. Your body language must be congruent with your verbal communication. Good listening skills are essential. It is important to avoid misunderstandings.

What influences the outcome of negotiations?

  • Level of trust between those involved
  • Number of people involved in negotiations
  • Experience of those involved
  • Length of negotiations
  • The importance of the topic
  • The number of options and avenues available
  • How much time there is to complete negotiations
  • The balance of power; who needs what from who. Can one side survive without coming to an agreement while another cannot continue business as is?


  • Budgets
  • timelines
  • procedures
  • line of authority
  • law and regulations

Business Agreements

What is a Business Agreement?

A contract of agreement that sets out in legal terms how a good or service will be provided and the responsibilities of all those who are parties. It is in a sense, a way of formalising a business relationship.

An agreement is used to:

  • formalise an idea or arrangement
  • document an arrangement for the provision of a service or product
  • fix a price for the provision of a good or service
  • ensure outcomes of a negotiation are legally enforcable
  • a bias for legal enforcement

Some types of agreements are

  • Corporate accounts

  • Service contracts

  • Agency agreements

  • Venue contracts

  • Rate negotiations

  • Marketing agreements

  • Preferred product agreements

Formal or informal?

The need for a formal agreement will depend on the nature of the business relationship. What is the level of risk for both sides? Larger organisations usually required formal agreements because there is a lot of value at stake. As a result, there is a need for legal recourse: The ability to take legal actions if things do not turn out as per the agreed terms.

Small businesses often come to informal agreements on a regular basis. One example is as such: Two neighboruing coffee shops have tables out the front. There is limited room. The owners come to an agreement that the first coffee shop can have all the room out the front, once every first month of the year for functions, and the second shop, once every second month. This benefits both shops. Competitors do not have to be enemies.

Finalising an agreement.

  • Ensure all parties involved are happy with the terms described

  • It is important both parties agree to the terms of the agreement before each party put their signature on the agreement document

  • Only legally binding if signed by both parties

  • Every written agreement or contract has a time line for this particular agreement to last

  • As this period comes to a close – there is an opportunity to renegotiate the terms and conditions of the agreement

  • It is important the agreement is monitored for compliance to the terms and conditions


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