Micro, small, and medium-sized enterprises (MSMEs) have received practical tips and advice on how to negotiate effectively to build better relationships and contribute to business success.
At the Jamaica Business Development Corporation (JBDC) Virtual Biz Zone held on Tuesday (July 5), Senior Business Development Officer at the entity, Colin Coley, highlighted the importance of being a good negotiator and provided strategies to help entrepreneurs increase their bargaining power with different stakeholder groups such as banks and suppliers.
In business, negotiation skills are important in everyday interactions and conducting formal transactions such as conditions of sale, lease, service delivery, and other legal contracts.
Mr. Coley said that for entrepreneurs to establish long-lasting partnerships, succeed in their respective fields, settle disputes amicably, and add value to their companies, effective negotiation abilities are required.
“One must not negotiate from a position of weakness but from a position of strength,” he noted.
He said that to be a good negotiator, one must exercise patience, remain calm and control his/her emotions and must be able to adapt to changing circumstances.
“You may enter a negotiation with certain expectations and goals that you want to achieve. However, during the process, you may have to pivot on the spot. Each negotiation is unique and the situation may change. A third party may change the demands abruptly, so you must plan for every situation,” he pointed out.
Mr. Coley said that there are five stages in the negotiation – preparation, clarification, bargaining, closure and implementation.
Speaking about the tactics that entrepreneurs can use when approaching different stakeholder groups, he noted, for example, that before negotiating a term loan with a banking institution, persons should use their contacts “to obtain information on the types of covenants that the bank might demand”.
Mr. Coley said that persons should be armed with this knowledge, so that they can “mention the requirements of other banking institutions if the lender you have approached is unduly restrictive”.
He further encouraged entrepreneurs to “think like a banker”, as the success or failure of the negotiation may be determined by how attractive the bank finds the business.
As it relates to negotiating with suppliers, Mr. Coley said it is important for the entrepreneur to sell himself as someone who will bring in a lot of business.
“Suppliers are just like any other business owner. When negotiating with them, ensure that they know you are someone who will give them repeat business, over the long term. If you have a track record of past purchases, let them know how much business they can expect from you based on those purchases,” he advised.
For persons who are just starting in business, the Senior Business Development Officer advised them to provide suppliers with a sales projection plan that is based on logic and research.
The JBDC Virtual Biz Zone is a weekly discussion forum held every Tuesday at 10:00 a.m. via Zoom.
The forum features presentations by JBDC’s business development experts and select partners from other public and private-sector entities on various topics.
Persons interested in participating in the weekly sessions can register on the JBDC website at www.jbdc.net.