Scribbling a signature on a contract paper isn’t exactly tough work (unless your signature is vintage abstract art). But signing a deal is the easy end of a usually long and difficult negotiation process. It’s the hours, days and months of haggling, offers and counter offers from the parties involved that make the final signatures worth savouring. Without them, deal making wouldn’t be an issue, let alone an art.
But there
is an art to closing deals.
Negotiating processes aren’t always going to be straightforward; you’ll need a special set of skills to pull them up from the brink of breakdown and steer them to winsome closure. Because it’s almost inevitable that you’ll face this sort of situation at certain points in your business life, you’d be better off ready and prepared for the challenge.
Being ready for the challenge of closing deals means knowing what to do at various points of the deal making process. It’s about understanding the steps you need to take to reach the goal for which the deal is being sought. Here are ten steps to nailing the perfect deal for yourself.
Clearly define your goals
You may have a vague sense of what a satisfactory deal would look like; but it’s important to define it in clear, measurable terms. It’s not enough to say you’d want to reach a deal to supply your products at “a profitable price”; you should decide beforehand what that “profitable price” (or price range) would be.
Having a specific set of goals to aim at will help you use your time and resources more effectively. Working with
clearly defined goals in view will make it easier for you to drive towards a deal you’ll be happy with.
Understand the other party’s needs
Knowing what you want is crucial to reaching a deal that’s good for you. But you won’t be negotiating with yourself. You’ll be trying to convince other humans like yourself that your offer is good. If you know what they want, you can present it to them in a way that doesn’t impede your achieving your own goals.
Of course, this might mean that you’ll have to research the other party. This could be easier if you’re dealing with a large company which has information about it all over the web. Find out why they’re considering the deal with you, how the deal could affect them, and what they would likely consider a successful outcome.
Ascertain your client’s financial state
Whatever your offer is, it will only fly with your potential partner or client if it fits within their budget. They might get turned off from the start if they consider your price to be beyond their financial reach.
Look at the size of the company you want to do business with. Examine their growth and expenses over time, and decide what they’d take for a deal given what they have.
Prepare your pitch
It’s advisable to develop a proper statement of your offer before the actual negotiations start. This statement should also include the possible benefits of your offering to the other party and why it’s better than other potential alternatives.
You should take your goals, the other party’s needs and their financial state into account when preparing your pitch. Make sure it appeals to the other side while being in tandem with your aims.
Request for more, expect less
This is a well known rule that isn’t always adhered to. If you’re the one offering a service for a price, begin with a higher price than what you hope to get. And if you’re the buying party, ask for more of the product for less than the price being offered.
Don’t be afraid to set the bar high at the start. But you should also not make the initial request so high that it shuts down the process before it even gets off the ground. Expect the other party to present a lower value counter offer as well. Anticipate their attempts to force prices down or raise the quality they can get for a price, and be ready with a response. However, you will want to avoid coming across as being too unyielding at the beginning of the discussion. It may be wise to plant your feet more firmly on the ground as the process goes on and concessions build up.
Don’t be combative
Resist the urge to don the fighter’s hat. You’re not out to batter and bruise your client or partner; you want to reach a mutually agreeable deal with them. Keep your emotions in check, and stay on the issues. Remembering that you need the assent of the other party to get a deal will help you avoid a
bargain threatening confrontation.
Hold your position for as long as is reasonable
This makes it clear you’re not taking the other side’s offer easily. They may push you for a very low value deal if you surrender ground to them too easily.
This doesn’t imply that you should be confrontational. You can certainly be firm without being offensive. Remain courteous, but make it clear that you value your stuff. In the end, being tough about your offering could positively influence the other party’s valuation of it.
Offer concessions
Being all hard and nearly impregnable might frustrate the person at the other end of the negotiating table. But it’ll work if it’s sprinkled with concessions at the right points of the process. Concessions give the impression that progress is being made, and motivates the one to whom it’s offered to stay on in the discussion.
Be careful to yield only as much as you’ve anticipated, or as much as won’t ultimately force you into a disadvantaged position. You have the option of pulling out from it all if you can’t give up any more ground and the other party still insists on squeezing out extra from you.
Get it done in time
Have a set time frame within which to close the deal. You should determine this before the negotiations start, so that you’ll approach it with urgency and an extra sense of purpose. This helps you to cut out needless digressions and focus on getting the deal done. It also primes you to walk away from the process if it carries on for too long.
Ensure that the time limit you set for yourself is realistic. You can do this by weighing the value of the time you’ll spend on the negotiations against what you’re likely to get out of them.
Sign the deal
Having the details of your agreement written and signed by all parties involved makes it easier to adhere to. You could also have a lawyer facilitate the signing of the formal agreement, if you want it to be legally binding.
