As a small-business owner you likely deal with larger companies that are your clients, partners or vendors. These companies may have experience and resources that you don’t when it comes to contract negotiations, but that doesn’t mean you’re necessarily at a disadvantage. Skillful negotiating can let you strike a deal with these big businesses that’s a win for you both, and that leads to long-term relationships.
We reached out to Michael Wheeler, who has taught negotiation in Harvard Business School’s MBA program since 1993 and who is leading Harvard’s negotiation course for its HBX online initiative, to get some advice for small businesses on negotiating with their larger counterparts.
Here are Wheeler’s key tips for small businesses who are negotiating with larger organizations.
Picture Your Win Before You Begin
You should walk into any negotiation armed with a clear idea of what you need from the deal, Wheeler says. At minimum, this means understanding what price you can accept that will let you make a profit, as well as which terms are acceptable and which aren’t. Do you want a long- or short-term contract? What trade-offs are you willing to make to secure the deal?
But beyond what you need, you should have a vision of what you really want, and you should bargain with that target in mind, as opposed to aiming for your minimum expectations, Wheeler says. “New ideas might come up that you need to consider, but you should know upfront what you want,” he says.
Also, remember that as a small business, your power isn’t in your resources but the value of your product or service. If you have cutting-edge technology or you can do things faster and better than the other guy, then you have something to offer that your negotiating partner needs, Wheeler says. Be clear about what they need and how you can provide it before you start negotiating.