Negotiation

Negotiation is a two-way discussion in which people put forward their views and work towards a deal that both sides are willing to accept. You explain what you need, listen to the other person and look for terms you can both agree on, aiming to reach an agreement rather than win an argument.

An entrepreneur may negotiate with many people. With customers, you might agree a discount for a large order. With suppliers, you might discuss price, delivery dates or payment terms. With banks, investors and loan companies, you might agree how much is borrowed and when it is repaid. With employees, you might settle pay, hours or working arrangements.

Why good negotiation helps

Good negotiation can obtain better terms, such as a lower price, a longer time to pay or a faster delivery. Better terms can lower your costs or free up cash, which helps you compete and increase profit. Negotiation also helps maintain good working relationships, because people are more willing to be flexible with someone who listens and keeps to what was agreed.

For example, you run a small business printing designs onto phone cases. A supplier quotes £2 per blank case for 50 cases. You explain that you can order 100 cases but need a lower price to keep your selling price competitive. After discussing it, the supplier agrees to £1.70 per case if you pay within seven days. You get better terms, and the supplier gets a larger order and prompt payment, so the working relationship stays positive.