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Negotiating is an inevitable part of doing business. You negotiate with suppliers, distributors and customers. Good negotiations can lead to prosperity, while bad negotiations can damage your business profitability.

Before you start

The first step to a successful negotiation is to be prepared.

Principled negotiation

Negotiations are generally perceived to be confrontational, because each party is trying to get the best deal they can at the expense of the other person. However, negotiations can take on a more positive light. You are not battling with the person across the table. You are building a relationship with them, and possibly the start of a great partnership. It helps to approach the process with a win-win goal in mind.

One method of non-adversarial bargaining is principled negotiation. Here are the four steps involved:

  1. Separate the people from the problem — Make the discussion about what is being negotiated, not who is doing the negotiating.
  2. Focus on interests, not positions — Both sides want something. Focus on the goals rather than on how you want to accomplish those goals.
  3. Invent options for mutual gain — Do not approach the negotiations with the goal of getting what you want. Make the goal something that benefits both sides.
  4. Use objective criteria — Base the negotiations on market values or traditional practices rather than on what you think things are worth.

Smart negotiating

Preparation and planning are not the only elements of smart negotiating. Handling yourself well at the negotiation table is also key. Some things to keep in mind are:

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