A Bluffer's Guide to Negotiating

Last Updated May 4, 2010 1:08 PM EDT

They might have a shrewd eye for business and dedication to their start-ups, but a number of small business owners have a hard time negotiating those all-important deals.

A T-Mobile survey of 1,000 small and medium-sized enterprise owners has found 31 percent don't see themselves as naturally strong negotiators. Even worse, over half of those polled said they'd walked away from a supplier after receiving an unreasonably high first quote.

The Institute of Directors, a professional body for company directors, has called on suppliers to provide better deals upfront to SMEs. But let's be honest: that's not going to happen overnight.

In the meantime, here are some ideas to help you re-evaluate your negotiating tactics and gain a bit more confidence:

  1. Tell it like it is
  2. If you're sending mixed messages to your supplier, they won't know you're unhappy. Be clear about what you can afford and what you expect. If you think a quote is too high, say so. Don't be afraid to be honest.

    If you're unprepared to buy at a certain price then tell them you're not interested and then return to the negotating table to work out a better deal.

  3. Do your homework
  4. If you've been dealing with a supplier for a long time, have you actually sat down and considered the costs of switching to another business? Are there hidden costs to switching that your supplier's all too aware of -- or could you do better with another business. Knowledge can be powerful -- and may be all you need to get a deal re-evaluated.

    If you're looking to renegotiate a contract, do your homework and demonstrate you're already aware of the what's on offer in your market and of the alternatives available. If you can demonstrate where your supplier is falling down on service, they'll be forced to do better or risk losing your business.

  5. Be realistic
  6. It's natural to want to want as much for as little as possible, but it's also worth thinking about whether or not your demands are realistic. The economic climate might require that you cut costs, but it's also important carefully to maintain service levels.

    If you go into a negotiation with an unreasonable set of demands, suppliers may see your business as more trouble than it's worth. What is essential? What can you live without? Answer these questions before you speak to your supplier, or you may feel railroaded.

  7. It's about compromise
  8. You might be tempted to walk away from an unfair quote, but instead of closing down the negotiations entirely, think about what you'd be prepared to compromise to hit your financial targets.

    It might sound obvious, but negotiations are about essentially about give and take -- if you're unprepared to give anything up, you and your supplier lose out.

  9. Say what you mean
  10. ... and mean what you say. There's no point in threatening to ditch a software provider to go open-source if you have absolutely no intention of doing it, for example -- it'll just make you look silly in the eyes of your current suppliers.

    Be honest, upfront and consistent with your message then you'll find yourself cultivating better results and working relationships with your essential suppliers.

More detail on negotiating with suppliers can be found in this Gartner webcast.

(Photo: HolyWata, CC2.0)