For a business to do well, they must master the art of negotiation. The company must be able to negotiate prices, deals and the list goes on and on. It’s time for another episode of MoneyMovesJa brought to you in partnership with EXIM Bank’s Business Advisory Service, giving you the tools to grow your business. Joining me now to discuss how to negotiate for your business we have Vice President and Head of Real Estate and Project Finance at Sygnus Capital, David Cummings.
Key principles to consider when entering negotiations
Vice President and Head of Real Estate and Project Finance at Sygnus Capital, David Cummings said there are key principles to consider when entering negotiations.
A negotiation essentially involves two parties trying to arrive at a consensus with a mutually agreeable solution.
Speaking on #MoneyMoves with Kalilah Reynolds recently, Cummings noted that stakeholders looking to negotiate must first have an understanding of what the process means as well as have an idea of the intended outcome of the discussions.
“Know where you’re trying to end up in terms of the discussion, what are the strategies that you’re going to use and the tactics needed and of course how you’re going to research the enterprise that’s going to be across the table from you. Also need to know what are your strengths, what are their strengths and how you’re going to end up in a situation where it’s going to be a win-win,” he said.
Cummings said a negotiation could end with both parties emerging as winners, adding that the people are the most important part of the process. He noted that negotiations should start from a position of respect, integrity and common understanding. This he said makes the process a lot easier.
“Respect starts with things as simple as being on time, being respectful of the other party’s interest, position and also ensuring that you listen to what they have to say. Too many times we listen to respond as opposed to listen to understand. If all you’re doing is waiting for your turn to spill out what you want to say then you’re going to start out on a difficult footing,” he explained.
Cummings also noted that the value and worth of things on the negotiating table should be worked out prior to the start of the discussions to ensure that an offer being made does not insult the vendor.
“Once you have the parameters, whether based on calculation, valuation or model, essentially you present it to the vendor and that’s how you begin the negotiation and things will start to flow from there,” he said noting that the same principles apply whether the negotiation involves a transaction or otherwise.
Cummings said while it is advised to have firm research and understanding of the market, it’s also best to use a third party negotiator to help enhance one’s position. The third party negotiator should be an expert in the process who can push the boundaries to get the best out of the talks for their client.
According to Cummings, emotions must be carefully managed during negotiations as some could prove disadvantageous to parties involved.
At the same time he said instinct remains an incredible skill for such meetings.
“You can’t put a price on instinct…are they being genuine, evasive? Are they making eye contact? A lot of that will tell you who’s being truthful or if it’s somebody who can help each party to arrive at a win-win,” he said.
With COVID-19 disrupting the typical format of negotiations, Cummings noted that there comes a point in a transaction when parties should meet face to face as not being able to read body languages, etc can put stakeholders at a disadvantage when trying to finalize discussions.
“We are social animals and we’re used to a certain interaction with each other,” he argued.
In the meantime, the Vice President said parties should also know when to walk away from a negotiation.
He said persons should ensure they work out the best alternative to a negotiated agreement (BATNA) even before initiating talks to know where to draw a line if all else fails.
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