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It is a myth that businesses only do business with other people, i.e. consumers. There are many occasions in which a business will have business dealings with other businesses, whether it’s vendors, suppliers, or consultants. It’s called business-to-business. When doing business with other businesses, you will need to know not only how to effectively negotiate; you need to know that you have the power to negotiate anything you want. Just because you are a new start-up, don’t make the mistake of thinking you have to accept the offer set before you. When working with other businesses, negotiation is a normal and expected practice.
First of all, when doing business with other businesses there are some key distinctions from doing business directly with consumers. Below are some major differences:
- Length of term: Usually when dealing with consumers, transactions are made right away. Not the case when dealing with other businesses. Many deals you strike up, with suppliers for instance, are for long periods. Therefore, it is essential each side gets the terms they expect because the business relationship could last for quite some time. Business-to-business is the development of a long-term relationship, not just a single act.
- It’s not personal, it’s business: When people look to do business with you, they are making an emotional decision based on your product, service or the customer service you provide. When doing business with other businesses, emotions never come in to play. Every business is looking to better their bottom line, and that means they need the best deal possible in order to keep costs down. They will always look to negotiate the deal, despite how much they may personally like you or your business. So it’s good to know you don’t need to wine and dine your vendors, but it does mean you will need to be smart in your negotiations.
- Decisions take longer: Consumers usually only take from a few hours to a few days to make a decision on a sale. Not the case for businesses. They may take weeks, sometimes months to mull over an offer. And even then, they may come back with a counter offer. Patience is the name of the game when negotiating with other businesses, so don’t rush your offer.
Now that you are aware of the time and brevity involved in doing business with other businesses, you can take steps to negotiate your deal wisely. When negotiating with your vendors or suppliers, or any business for that matter, it’s best to keep the following things in mind: your price, your length of term and what you are willing to sacrifice. When entering negotiations you need to know what your bottom line is. What price is the lowest/ highest you are willing to go to? How long do you want your agreement to last? You also need to know what you are willing to give up in procuring the best deal, and what is an absolute necessity. Knowing the answers to the questions before you begin negotiations will ensure that you don’t walk away dissatisfied.
Below are some negotiation strategies:
- He who does the least talking wins. Talking during negotiations can make you appear vulnerable, nervous or weak. Those who are frank and firm don’t need to do a lot of “selling”. State what you want, and then be quiet. You’ll have a better chance of coming out ahead.
- Don’t be desperate, have an alternative. Don’t go into negotiations desperate to seal the deal. If you have other alternatives in place, then you’ll be willing to walk away. And when others see you don’t need them, they may be more willing to agree to your terms.
- Make sure you’ve done your homework. Look at the deal from the other side of the table and anticipate any questions they may have. Then do the proper industry and market research so you readily have answers. People can be persuaded by facts and figures, so make sure you have all the information they could want.
The deals you have in place with your many vendors, suppliers and service suppliers will make a huge impact on your operating expenses. It is critical that you have a deal with terms that are favorable to your business and fair. To get the best deal you need to practice the art of negotiation.
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