Entrepreneurs who find negotiating deals painful can find comfort from swimwear accessory group Halto.
The company, which sells a device for use on halterneck bikinis to prevent bruises and blistering, has landed contracts with manufacturers and lingerie retailers such as Bravissimo, since launching in 2012.
Co-founder Lucy Cox says developing negotiating skills has been crucial. “We have learned a lot!” she explains. “You need to know your worth before starting any negotiations. This could be your own numbers, what customers say about you, how you differ from the competition and what value you can add to the client.”
It’s often tricky for entrepreneurs, who may be experts in their own fields of, say, design or technology, to master the art of the deal.
“Negotiations cut across everything an entrepreneur does,” says Clive Rich, a lawyer and owner of negotiation consultancy Rich Futures. “Whether it is dealing with investors, manufacturers, shareholders or suppliers you need these skills every day. But often entrepreneurs don’t plan and try to mimic someone they have seen on TV, like Alan Sugar. They get lost in negotiations.”
Tim Cullen, programme director, Oxford Programme on Negotiation at the Said Business School, adds: “Entrepreneurs are naturally competitive. But that is not necessarily an advantage in negotiation. It is not a competitive sport. It is about stepping into the other person’s shoes and understanding their point of view.”
Before any negotiation begins he advocates clearly determining what you want to achieve. “What do you want to get out of it? What is it that you desperately need or what could you possibly give away?” he asks.
This preparation includes gathering information on whoever you are negotiating with. “Talk to people who have previously negotiated with them and research them online. What are their motivations? What are their preferences, foibles and strengths? Maybe meet for a coffee beforehand to get to know them better,” he says. “Not enough people focus on the person across the table.”
Rich says more understanding can be garnered during the negotiations. “Spend a third of your time talking and the rest listening,” he says. “Most people go in fixed on what they want and don’t allow feedback from the other side. Listen out for clues about what is motivating your counterpart and what sort of person they are. It will help you find common ground.”
Entrepreneurs must also be aware of their behaviour – their words, voice and body language. “There are ‘I’ behaviours such as ‘I want this, I want that’,” explains Rich. “‘You’ behaviours are softer such as ‘What do you think about this price?’ and ‘We’ behaviours are where you share problems and solutions. Ask yourself if you are using the right behavior for the right negotiation stage and with the right person. The ‘I’ behavior can be useful in the cut and thrust of bargaining but is not good at the early stage when you are building rapport.”
Behavioural biases must also be managed. One of these is called ‘non-rational escalation of commitment’ in academic circles. Cullen explains: “An example would be when you keep lowering the price to get what you want until it gets to a point where it is not profitable. You become irrational and give too much up.”
Cox of Halto is aware of this problem. “In high pressure conversations, it is easy to just agree to the terms if it means you win the contract. By having a firm understanding of your lowest negotiating point you can confidently negotiate and make an agreement,” she explains.
Another problem is confirmatory bias. “You are too gung-ho and only note information that confirms what you already believe,” Cullen says. “Again, you don’t fully listen to other points of view.”
Finally, common sense also plays a part.
Cox states “Just being a trustworthy, easy person to get on with goes a long way. Also, don’t be afraid to walk away if your gut tells you that they would not be good people to work with. Stay true to your values.”