NEW YORK (MainStreet) -- Whether it's for a lease or trying to win an overseas vendor, small-business owners should master negotiation skills.
Jim Camp, an expert in the art of negotiation, says good negotiating requires limited compromise and throwing the "win-win" theory out the door to lead to profitable agreements.
Whether it's for a lease or trying to win an overseas vendor, small-business owners should master negotiation skills.
Camp is the author of two books:
Start With No
No: the Only System of Negotiation You Need for Work and Home
. Camp also founded the Camp Negotiation Institute, where he teaches "how to recognize, neutralize and overcome predatory negotiation tactics that result in poor outcomes." Organizations from Fortune 500 companies to the FBI and its hostage crisis team members have used Camp's negotiation training.
Camp answered a few questions on negotiation strategy:
Why is it critical for small-business owners to know how to negotiate?
It's very simple. Every penny they ever bring into their business is brought in because of an agreement with someone else. It's the most critical thing they do every day, but most haven't been trained at it. If they've been trained, they've been trained to give away and compromise, which is totally incorrect. And they wonder why they can't get to where they want to be.
Where can negotiating skills come in handy?
I have a small-business client that just
saved $24,000 in rent over a two-year period on the office space they were leasing. They also picked up $8,000 in new carpet, paint and sprucing up of the office they are leasing. They also got a whole new AC and heating system, paid for, that they would have had to pay for themselves.
That's just one example of a successful small-business negotiation. That $40,000 is very valuable to a small business.
What do they learn in the training program you offer?
They'll learn how decisions are made; they'll learn that no one ever makes a logical decision. They'll learn how to not compromise needlessly. They'll learn how to raise prices when they should and not be afraid to raise prices. They'll learn how to build truly great business relationships that will last for decades in repeat business. So many agreements are based on the collective bargaining model, which creates conflicts; the agreements they make will stick and last.
Are there universal rules to follow that make for effective negotiating?
The very first fundamental rule is that negotiating is a human effort to bring about agreements between two or more parties with
all parties having the right to veto
. That right to veto is a critical agreement. Anytime we appear to take someone's right to veto away from them we can create conflict.
So how does that rule apply? If they're going to propose something, they should let that person know they are very comfortable with them saying no. So by giving permission, it brings down barriers and makes for a real discussion of the problems to be solved and brings about better solutions.
Rule 2: No talking.
That sounds crazy, but when the other person is allowed to talk they create a vision in their own mind of what they're trying to get across, and that's when they can reveal the real problems to be solved, which is very valuable to you. So being able to ask really good questions and taking good notes is really a good rule to obey in small business.
Rule 3: Never ask a question you don't already know the answer to.
If you don't know the answer to the question, you're putting yourself at risk. They could become offended or emotional and say no, even if you are making sense. That's a very important rule.
Rule 4: All agendas must be negotiated.
If you think about when you started the call, I agreed to your agenda of questions and answers before you posed the questions. That's setting an agenda in a negotiation, and I agreed to that agenda. As a small-business person, don't go showing everything you got and then be disappointed if someone says they're not sure they want to do a deal. So you negotiate an agenda to get them to agree closely to what you're proposing.
What are some common mistakes made by small businesses when negotiating?
Because of their size they think they can't compete with bigger players, so they discount deeper than they should or need to. That's all done out of the emotional fear of not being able to compete.
small businesses do that costs them dearly is they'll overwhelm people with intellectual information and throw a wet blanket on decision-making for the other party because they're so overwhelmed with information. Small businesses end up compromising to gain their business.
The third gigantic one to me, and I see it all the time with new clients, is they don't even realize they were in a negotiation. The most dangerous negotiation is the one you don't even know you're in. They'll give up information not realizing they're in a negotiation and it's going to cost them money and not realize it.
They believe that the best business is done with a "win-win" mindset: "How much do I have to give up to get this deal?" That "win-win" -- or "get them to like me" -- mindset drives that deep discount.
-- Written by Laurie Kulikowski in New York.
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