Guest post by Mary Powell, Marketing and Sales Executive
According to the Oxford American Dictionary the word negotiate means “to try to reach an agreement or arrangement by discussion.” But what do they know? Good negotiating takes a lot more than just discussion. In my next several articles I will discuss the fine art of negotiating.
This this first article we’ll about “leverage”, the next one on “information gathering”, then we’ll tackle “credibility” and “judgment”.
Honing your negotiating skills will make you a more successful business person.
As a fashion business owner, you have likely negotiated the price of a fabric, a production run minimum from a factory, or your cut of a trunk show collaboration with a boutique. In all of these cases, you can come out on top if you understand the factors involved in negotiating.
Leverage is the influence you can bring in a negation. You need to know where you stand and you need to understand when and how you’re at an advantage or disadvantage.
Some important leverage factors are: necessity, desire, competition, and time.
Necessity is simply the need to make a deal. makes sense, right? The party that has a lot invested in the deal – both time and money – will be at a disadvantage.
So, it is absolutely essential that you know the other party’s urgency as well as recognizing your own. When negotiating, see if you can find out if the other party is actively looking for new accounts (not always so with a factory) or if you textile distributor has had something on the floor for a while (it could be perfect for short run capsule collection). The more you understand about the situation they are in, the better.
Sometimes necessity is not present, but desire is. One party will likely want what the other is offering. For example, a retail boutique is always in need of more foot traffic. If you have a strong track record of being able to bring in new customers to your stockists, you’re at an advantage.
On the other hand, suppose you came up with a great new dress design. Your desire to market that dress in a particular place will have a strong impact on your leverage in bargaining the percentage you might receive on sales. If your desire is strong, you will likely give up more than you should.
Beyond necessity and desire, the presence of competition also influences leverage. Competition can put pressure on a buyer to pay top dollar.
Imagine you’re looking into a PR agency for your brand and you found one you love but they are very busy. If there is competition for their services they might overcharge, and get what they are asking.
Conversely, competition can put pressure on a seller who knows that several others are vying for the business. For example, if you are negotiating with an up-and-coming photographer, they are likely to cut you a better deal than a well know professional because they know they have a lot of competition.
Finally, time pressure has to be considered. If either you or the other party is feeling crunched for time, there will be pressure agree to things.
So, for example, if your projected numbers for holiday sales depend on you booking three trunk shows, don’t wait until October to start pitching, that puts you in an obvious time crunch.
Some Negotiating Tips
It’s rare that both you and the business you’re negotiating with will have equal leverage. So do your research and take advantage of all the leverage you can get.
- Think hard about what you have to offer and try not to get involved in a situation where you desperately need a specific outcome.
- Don’t let on to others how strongly you want a deal. It will give them leverage against you.
- Be aware of competitors offering the same thing you are negotiating, and make sure the other party knows you are aware.
- And finally, go to the table before you are in a time crunch.
In the next article, I will talk about information gathering and how it can help you make a good deal.