How do you negotiate the best deals for your business? Ged Futter, director and founder at Groceries Supply Code of Practice, is a former Asda buying manager and now trains suppliers on negotiation – he explains the art.
When you negotiate well, you feel more in control. It can improve your business relationships, lower the price you pay for things and enhance what you receive for your farm outputs.
As a farmer, there are many things you cannot control, such as the weather and commodity prices. Negotiation allows you to exert influence over what you can control more and can mean the difference between a really good or bad deal for your business.
A combination of technique and preparation will put you in the best possible position to negotiate.
There is a difference between negotiating and influencing: You do not always want to be negotiating with a long-term supplier/buyer, but you do want to be influencing regularly. Good relationships allow you to do this.
Let the person or company know how business is going on a regular basis – this plants the seed of what may come in negotiations and manages their expectations.
Using the weather in conversation can be an easy way to do this as farming is so impacted by the weather – mention how your crops are looking, or how the price of feed or milk is affecting your business.
Negotiation is not about getting exactly what you want, unless you are very lucky, but about what both parties are happy with, which is usually somewhere in between.
Otherwise, if one party always seems to have the power and is constantly pushing, it may cause the other to eventually walk away from the relationship.
This leads to the next point.
Before any negotiation find out as much as you can about the other party – you need to understand not what they want, but what they need so you can come to a deal which you both benefit from.
How is the company performing? Look at its accounts online at Companies House. Find out how the market it operates in is fairing and what prices are doing. Has it recently got a different supplier, or new customers? What alternatives does it have to you? How much does it need you?
Timing is important – are there times of the year when it can’t get hold of what you can provide? Are there times when business is slow and it may be more likely to cut a deal?
This might not just come down to money – perhaps you can get a better price if you offer something else. For example, you could offer to deliver grain to a merchant between Christmas and New Year when no-one else will.
Know your own business needs before negotiating. What are you happy to accept and on what terms? What can you afford? What do you need to make a margin?
Be clear in your mind about when you should walk away from a deal. A bad deal can be worse than no deal.
Work out what your alternatives are if you have to walk away. This will give you confidence when negotiating and help prevent any panicked decisions.
With a longer term relationship it should be easier to understand how a person or company negotiates.
For example, does the person tend to open the negotiation with an extreme offer? If so, tell them it is ridiculous, otherwise they will continue to throw out even more extreme offers.
If you don’t know the other person, be really sure of yourself.
If you’re building a relationship, perhaps there is one person that you get on better with in a company. Go in and have regular chats to work this out and ensure they are there when you go in to, for example, buy a new tractor.
A good negotiator listens. If you can sit in silence for longer than is comfortable, the other person will normally continue to talk, giving you valuable information.
Some of the best negotiators simply make their point clearly and then sit in silence.
Listen for ‘soft’ language that suggests something is not fixed. For example, ‘I’d like’ and ‘around this figure’ may offer points for negotiation.
Conversely, make your position as clearly and definitely as possible, for example, saying ‘I need’.
Observe body language. If they look upwards, they are probably looking for information they don’t know. Are they sat forward and engaging with you, or sat back with their arms crossed not listening and just making the same point? If so, reiterate your point clearly.
Be engaged and as calm as possible throughout – panic shows.
Ask for a moment out from the negotiation to think about options on the table. Use these few minutes to compose yourself and consider whether it is going the way you want. Do you need to change tactic?
Taking time out also shows you are not a walk-over prepared to accept things and the other person may have to come closer to what you need.
You can also say you need to phone the boss, the finance director, or a partner – then use this as a way to say you cannot move any more, or can only move to a certain point.
Shape Your Farming Future is a series of informative and practical guides looking in-depth at issues pertinent to farmers when planning for the future.