Buying and selling :sx Successful negotiating .sx Outline Negotiating skills are described and they include :sx preparation .sx listening and questioning .sx trading concessions .sx avoiding misunderstanding .sx maintaining the momentum of negotiation .sx The meaning of negotiation .sx Negotiating involves recognizing situations where the terms of trade can be changed to one's advantage .sx In the industrialized West many buyers accept the authority of the price and wait for temporary reductions , if they can .sx However , there is the case of an immigrant from the Far East who settled in the West with his family and visited the local family owned supermarket on a Saturday morning to buy groceries .sx He filled his trolley and moved to the check-out .sx To the cashier's surprise he did not just deposit his purchases by the till and wait for them to be listed .sx Every time he picked one of the groceries up he nominated a price that was below the store's price .sx The cashier was astonished and rang her bell for the owner , who arrived quickly .sx Then it was the immigrant's turn to be astonished .sx He could not imagine a trading system where there was no negotiation .sx Fortunately for him the owner entered into the spirit of the occasion and the two began a weekly process of negotiating over groceries .sx The owner quickly exploited his strengths - the next supermarket was several miles away - and soon achieved his usual profit margins , sometimes getting an above-listed price sometimes below .sx The two became firm friends .sx Negotiating from ignorance .sx Sometimes negotiating advantage can be derived from ignorance .sx A chemicals company sent a highly qualified salesman to see a buyer in a pharmaceuticals firm , to discuss a possible order for a bulk chemical .sx The chemicals firm was not at that time a supplier but hoped to become one .sx On the day the salesman arrived , the buyer was ill and a senior chemist in the research and development division was asked to see him instead .sx The salesman explained that he could offer a substantial discount on the normal price for a first shipment of 2 tonnes .sx The research executive was uninhibited by purchasing experience and he asked for the same discount to be applied for a two-year period , during which consumption of the chemical would be 50 tonnes .sx The salesman asked to use a telephone privately and came back into the room to say that his sales director had agreed the discount for two years .sx The researcher was disappointed to receive only a note of thanks from the head of the buying department and not a salary bonus !sx .sx Negotiating to overcome a refusal to sell .sx There can be occasions when the potential buyer wants to buy something that is not apparently for sale .sx He should take heart from the experience of a businessman who decided that a particular industrial site would be ideal for his business , even though there was a busy workshop already there .sx He telephoned the owner and said that he would like to buy the lease ( having estimated that it was worth pounds50,000) .sx The owner replied abruptly that it was not for sale , so the businessman responded :sx " Do you mean that if I offered you pounds100,000 for the lease , you would not take it ?sx " The owner replied :sx " That is " ; and the businessman countered by saying :sx " In which case it is for sale and you and I are simply talking about the price .sx " Negotiations began and the lease changed hands for pounds48,000 .sx Preparing for negotiation .sx Before entering into a negotiating process , a general appreciation should be made of the situation .sx What are the comparative strengths and needs of the parties in respect of this particular issue ?sx This does not mean that negotiation should not be attempted with a much larger firm .sx It may itself be under pressure , perhaps to reduce its stocks , or it may be a firm of commercial estate agents which has had a property you want on its books for longer than its principals would like .sx How urgent is the matter , for you and for them ?sx By when do you need to conclude the matter and what deadline do you judge they have in mind ?sx How important is it for you ?sx Does it involve enough money to make it worth your while negotiating ?sx Negotiation is a process which requires special preparation , so most small businesses can only afford to pick out a few major sales or purchases and approach them in this way .sx Such items might include wage negotiations , a new lease for premises or a new machine for a workshop .sx Consideration of these points should make it easier to decide whether to try and negotiate .sx Negotiation occurs when two parties have a mutual interest in agreement but differ as to the precise nature of that agreement .sx If the maximum that one party is prepared to offer is below the minimum that another party is prepared to accept , there is no basis for an agreement .sx This situation sometimes occurs in an industrial dispute and it drags on until one or both of the parties alters its expectations and negotiations begin .sx List the negotiating points .sx The next task in preparing for negotiation is to list ( often mentally but written down if the list is a long one ) the points that one hopes to gain or the points that represent the limits to which you will go .sx For a machine for a workshop , these might include the following .sx Total purchase price of pounds9000 .sx pounds7000 invoiced one month after delivery .sx Remaining pounds2000 invoiced two months after delivery .sx Payment due 60 days after invoicing .sx Supplier's engineer to assist with installation , on day of delivery , and test run machine to customer's satisfaction .sx Two-year guarantee .sx When guarantee expires , a labour and spares maintenance agreement .sx A two-hour response from the supplier in the event of machine breakdown .sx Evening delivery and installation so that the daytime work of producing to meet customer orders is unimpeded .sx Delivery on a date to be nominated by the customer .sx Time is an important variable in any negotiation , witness the employers who concede a percentage wage increase in return for an agreement that it shall extend over 18 months rather than a year .sx Compensation if delivery delayed , of pounds100 a day .sx Change of specification .sx Anticipating the supplier's negotiating points .sx In his sales presentation , the supplier may well have given his terms and presented them as fixed .sx These could cover .sx total purchase price of pounds10,000 ; .sx 10 per cent deposit payable with order ; .sx remainder of purchase price invoiced on delivery and payable within 30 days ; .sx one-year guarantee ; .sx delivery date to be notified when deposit payment completed .sx Other facilities that the supplier might be prepared to consider have to be estimated .sx They might include .sx change of specification ; .sx his best efforts to give more specific notice of delivery ; .sx annual service agreements when the guarantee has expired .sx Determining the negotiating strategy .sx The next stage of preparation is to decide the minimum that will be accepted .sx This depends on .sx the ease with which an alternative source can be used ; .sx the loss of profit that might accrue from delaying the purchase ; .sx the time that can be spared from other tasks in the business .sx Once this is completed , the customer is in a position to begin negotiation .sx If possible he should do this in a situation , such as an office , where he is less likely to be distracted .sx Negotiating on home ground is usually an advantage , especially for a small business person .sx Not only can you control interruptions but you can begin negotiating when it suits you .sx Defeating intimidation .sx Larger firms in particular have plenty of devices to make the visiting negotiator feel at a disadvantage :sx 1 Making you wait well beyond the appointed time , perhaps on your own in a small room .sx There are various ways of countering this tactic , such as :sx taking work with you and getting on with it , as if the delay is useful and not an inconvenience ; .sx asking for a phone so that you can call your business and talk to your employees ; .sx asking for more information about the firm you are visiting , such as the names of colleagues of the contact ; .sx asking for the use of office facilities , such as photocopiers .sx All these devices can give the impression of a busy and successful business person who has a great deal to do in the working day .sx They also have the advantage of preventing you from sitting and worrying about the outcome of the negotiation .sx Your confidence is enhanced and that confidence makes a successful outcome more likely .sx 2 Holding the meeting in a lavishly furnished conference room .sx 3 Alternatively , holding it in a small office and allowing frequent interruptions from colleagues and taking all telephone calls .sx This is no reason for you to deviate from your objectives .sx 4 Saying at the beginning of the meeting :sx " I can only spare twenty minutes !sx " I was once subjected to this treatment but took no notice and worked towards my objectives .sx The meeting ended successfully and amicably an hour and a half later .sx I reminded the big company executive of his original time limit .sx It was obvious from his reaction that he had forgotten it and that it was simply a negotiating manoeuvre .sx Listening and questioning .sx Once the negotiations have begun the best general advice is .sx listen , .sx ask questions .sx Listening , particularly when the other party is summarizing its position , gives the opportunity to hear if the other party is changing its position , and they may well do so , simply because a silent attentive audience prompts the desire to talk .sx Asking questions means , apart from the obvious advantage of acquiring information , using the best technique for dealing with unwelcome propositions .sx Such questions can also be used to make the other party think more about the implications of their position :sx " Do you want our opinions of your machine to be based on our testing it without one of your engineers being present ?sx " This question hints at a possible weakness in their position , which they may not have considered .sx Some questions can require specific answers , such as asking for the longest continuous running time any of their customers have obtained from the machine .sx Others seek to strengthen a position by asking for opinions :sx " Do you think your new machine will wear as well as the last one ?sx " The seller cannot deny that he has less experience of it and less information and may be forced to reply with a generality such as :sx " We have great confidence in it " , which does not improve his negotiating stance .sx Sometimes the process of trading concessions can be compressed by asking 'if' questions :sx " If we take only 30-days credit , will you deliver by the end of next month ?sx " .sx Negotiating principles are not just for application in complicated matters .sx A customer walked into an electrical shop and asked to buy a new kind of telephone .sx The sales person went away to the stock - room and returned with the information that the product on display was the last in stock .sx The customer asked for a discount as it was shop soiled .sx The sales person stood his ground and explained that it was not policy to reduce the price of displayed products , whereupon the customer said he was sure he could find one in another store .sx The sales person hurriedly returned to the stock-room and returned to say that he had found one after all still in its package .sx By this time he was so anxious to please this customer that he consulted the company price list and said the price on display was incorrect .sx The customer left the store with the product he wanted reduced in price by a quarter .sx By keeping his mind on the objective of the best possible value for money , he did much better than he might have expected if he had not attempted to make his purchase in a negotiating frame of mind .sx The detail of those negotiations and the surprising change of mind by the sales person are less important than the result .sx Avoid objecting .sx Never make flat objections .sx The object of the exercise is to continue the negotiation until there is a reasonably satisfactory outcome .sx