Do not Make these 7 Mistakes in Business Negotiations

Negotiation is more art than science. Just as some people have natural ability for art, I believe there are people born with “negotiation” genes. They already possess virtues required to succeed at negotiations.However, not all is lost for those who do not have these natural skills. By understanding your limitations and making plans to overcome them anyone can improve their success rates in the negotiation process.

Earlier we discussed 5 fundamental rules to keep in mind during negotiation. In addition to not having good understanding these rules, many business owners make certain mistakes common to naïve negotiators. While these mistakes will not put you out of business (at least not right away!) they can do substantial financial harm to you. Here is the description of 7 most common mistakes:

1. Start negotiation without knowing BATNA. BATNA stands for Best Alternative to No Agreement. In simple terms, it represents the point at which you are willing to walk away from the negotiation table without a deal. While everyone needs to compromise during negotiation there is a point beyond which you simply cannot go further. Without having a good understanding of BATNA you will not be able to come up with a good negotiation strategy. In addition, you will either give in too much or not able to reach an agreement even when it is in your best interest.
2. Not researching about the person or company you are negotiating with. Planning is key to success during negotiation. Understanding the history of the person or the company will enable you to find what they might be looking for in the negotiation. This gives you tremendous leverage in proposing alternatives to your advantage and improves your odds of reaching an agreement.
3. Squeezing the last penny from the deal. While you do want to get the best deal from negotiation you should not lose focus on the big picture. Trying to get the last penny makes other person feel like loser and may even jeopardize the deal at the last minute. Even if the person gives in to your demand for last penny it may come back to bite you afterwards if you have to go back to him for a favor.
4. Not keeping all options open. People who set their mind on one outcome from the negotiation will never be able to reach an agreement. While you do want keep in mind the minimum outcome from negotiation you should also have wide variety of other options you are willing to compromise on. Remember, negotiation is all about give and take.
5. Showing all your cards. This is quite obvious, yet many naïve negotiators make this mistake in the name of being fair and honest. While there is nothing wrong with being fair it doesn’t mean giving up all your leverage points during negotiation, which is what this mistake does. The more cards you hold off from the opponent the more you will be able to offer as compromise during later part of negotiation.
6. Try to rush through the negotiation process. Those who show too much eagerness to wrap up negotiation and move on will lose to the patient ones. There may be times when you have to make sacrifice in the name of speed, but as a general rule you should prepare for lot of breaks and back-and-forth during negotiation.
7. Not listening well. Of all the mistakes mentioned here, this is the most overlooked and costly mistake people make during negotiation. They try to explain what they want and need. But, turning the table around and listening to what the other party is looking for in the negotiation offers you the best vantage point in negotiation.

What are your observations? Any other lessons you want share from your experience?