Negotiations are important behind the scenes of many successful deals. People often treat negotiations in a light way. They feel that these are just general conversations happening between two people.
But when looked at carefully, negotiations are conversations that involve two entities trying to protect their personal interests.
The ability to effectively negotiate is a skill required by many startups in today’s time. The aim of all negotiations is to reach a win-win situation and to maintain the relationships that are important to the business.
Poorly managed negotiations result in biased contract formation or loss of business opportunities. A loss that you can not afford as a startup.
When so much is at stake, even a tiny error can prove to be costly. Recognizing mistakes and taking steps to prevent them is better than committing one and realizing it later.
In this blog-post, we discuss the common mistakes made by startups, which when avoided can prove to be the difference between a successful deal and a compromised contract.
1. Not Being Prepared
Startups often commit the mistake of rushing into a negotiation or ignoring detailed planning. Even if you feel that you have a good idea and you are well prepared, rehearse your arguments before getting into negotiations.
This helps you in gaining more confidence and shows the other party that you possess adequate knowledge about the subject. Rehearsing also decreases your chances of forgetting important details.
By studying the details of the other party, you can think of arguments from their perspective too. This will give you insight into things you are not aware of.
Negotiations are also about respecting the interest of the other party. To reach common ground, many times you will have to go for a compromise.
Be prepared with what are you willing to compromise on, or what is your next best alternative in advance.
You do not want to get lost in the arguments, always prepare your agenda in detail, and try to stick to it. We advise you to write it down and carry it with you at the meeting.
2. Making Assumptions
Know your numbers and facts correctly, but it is not only about the quantitative data. For a successful negotiation, you need to have a holistic view. You need to be aware of things from a 360-degree viewpoint.
You are going to be the decision-maker; and when making arguments or agreeing to deals you do not want to get less than what you deserve or agree onto something just because of your lack of knowledge.
Being prepared does not mean that you assume what the other person is going to say or agree on. To have a wider scope open during the negotiation, it is always advised to not assume anything as a non-negotiable thing in advance.
Follow the path that you have prepared for, but if things go unclear, making assumptions is not always the best option. Ask them clear questions or for more details before reaching any conclusion.
3. Being A Poor Listener
Follow habit number 5 by Stephen Covey, “Seek First to Understand, Then to Be Understood”. He is meaning to say that people only listen to the other person with an intent to reply and not with an intent to understand.
One goal of a successful negotiation is to build stronger relations. Being a poor listener by ignoring what the other person is trying to say or by taking over when they are trying to speak is detrimental to the health of your relationship.
These signs showcase that you do not value the inputs of the other person and the negotiation is getting one-sided.
Understanding the view of the other person is important to reach an agreement. Do not let your emotions overtake you; remember this is not an individual task.
The idea is to collaborate and not to compete with one another. The goal is to align the synergies to achieve the best outcome. Be a good and empathetic listener.
4. Only Caring About Money
Though the ultimate purpose of any deal to be profitable, know that all deals are not only about making money. It is recommended to always hold on to your price, but do not be too stringent about it.
For example, a beginner freelance content writer might let go of a good project that could have strengthened his/her portfolio, solely because the client was not ready to pay more.
First, hear the other person out. If you think that changing the price could match the changes in the scope of the deal or the offerings, you might want to agree to it.
Think from a broader perspective, always look for the objective behind the price shift. Price is just one element of the deal, do not overthink it. Seek for propositions that talk about other benefits for the firm.
5. Concluding Deals In Haste
“Patience is necessary, and one cannot reap immediately where one has sown.” – Soren Kierkegaard
Working in a fast-paced environment and in the fear of missing out on opportunities, we often commit the mistake of hurriedly closing the deals. This is not recommended at all.
A deal is something that is going to determine your success and is going to take investments from you in form of time, efforts, money, etc. Therefore, it is crucial to think through it thoroughly before you sign the papers.
The idea is not just to read the terms of the deal but to understand the contract as a whole. Closing the deals in haste often leads to settling on a compromise. To avoid this and to save yourself from future troubles, having patience when accepting a deal is essential.
Negotiation is a skill. The more you practice, the better you get at it. Not all negotiations will go as you planned, therefore, the trick is to keep these mistakes in mind and save yourself from making them.
Remember, actions avoided are as valuable as actions made in a negotiation process. Know that it is always about reaching a ‘Win-Win’ situation. Follow the tips to avoid making a mistake and to carry out a successful negotiation.
Hetvi works as a Product Associate at Refrens.com – India’s most powerful platform for freelancer’s finances and growth. She has worked for some renowned companies as a Brand and Digital marketing associate.