Four Steps to Master the Art of Negotiation

Four Steps to Master the Art of Negotiation

There’s no secret formula for successful negotiations. However, the following steps can help founders get great deals for their startups

Negotiation skills are essential for a successful startup journey. Studies have shown that people who don’t learn the art of negotiation are 60 percent less successful than those who do. As a founder, you will probably seek funding to grow or start your business, and that’s where the role of negotiation comes into play.

Almost every startup founder has to battle talks with potential investors. Here are four steps every startup founder should follow when negotiating with investors:

Set your objectives

As a startup owner, you need to determine your business objectives and goals. Have a clear understanding of your desired outcome, bottom line and plan B. At the same time, do your homework on the internet. Ensure that you understand the investors’ end goals, biases, strengths and weaknesses. The startup founder and investor need to be on the same page to get a fair and mutually beneficial deal.

Assess your BATNA

Don’t forget to assess your BATNA before approaching an investor for negotiation. BATNA is a term coined by Roger Fisher and William Ury, members of the Harvard Negotiation Project and the authors of Getting to Yes. It simply stands for “Best Alternative to a Negotiated Agreement”. Your BATNA protects you if the negotiations fail to reach an agreement. Sometimes, your best alternatives are not appealing. But you still need to decide which one is the best among the possible options. Therefore, it is always advisable to prepare and understand your BATNA before you enter into a negotiation.

Trust matters

Trust plays a crucial role between an investor and a startup founder. Trust and honesty are the foundation of successful negotiation. A study conducted by the Indian School of Business(ISB) provides insights into the varying levels of trust of negotiators and their effects on negotiation outcomes. The study suggests that trust promotes greater information sharing without the fear of exploitation. Building trust further leads to value creation and better results for all negotiating parties. The study emphasizes the importance of trust in the negotiation process and accordingly encourages negotiators to prepare strategies to attain fruitful outcomes.

Control your emotions

Entrepreneurs must keep their emotions and ego at bay to move through the negotiation process constructively. The display of emotions can have both positive and negative effects on the negotiation deal. According to Andrew Wasynczuk, a senior lecturer of business administration for Harvard Business School, anger is one of the most destructive emotions during negotiation. “It tends to start rising on both sides, and inevitably there is a point where it erupts. People walk away and say there’s value on the table, but I don’t care,” says Wasynczuk.

Now that you know how to master the art of negotiation, it’s time to get the most out of your business negotiations.

Header image courtesy of Unsplash

SHARE THIS STORY

Share on facebook
Share on twitter
Share on linkedin
Share on email
Nidhi Singh
A self-confessed Bollywood lover, travel junkie, and food evangelist. I like traveling and I believe it is essential to take your mind off the daily monotony. I’ll be reporting on stories from Asia's entrepreneurial ecosystem and can’t wait to get going!

RELATED POSTS

How to Invest in the Cannabis Industry

How to Invest in the Cannabis Industry

Despite cannabis (also known as weed or marijuana) being illegal in a large part of the world, the global cannabis market was worth US$28.26 billion in 2021 and is expected to grow to US$197.74 billion by 2028. Gone are the days when venture capital firms would dismiss cannabis companies as problematic investments.

Why Crypto Markets Crash and 5 Ways Investors Can Deal

Why Crypto Markets Crash and 5 Ways Investors Can Deal

With more and more people holding cryptocurrencies today, the crypto crash of May 2022 has had severe financial consequences. Reliable currencies, including Bitcoin and Ether, met a terrible fate, as did stablecoins, amounting to losses of over US$300 billion.

How Lemi Is Helping Small Businesses Reach Their Customers

How Lemi Is Helping Small Businesses Reach Their Customers

Starting a business isn’t easy. From finding raw materials and making your products to actually reaching the right customer base, everything takes a lot of time and energy. Even though this process is so hard, a lot of people venture out and start their own businesses, so much so that small business enterprises (SMEs) make up 90% of the world’s businesses.