One of the advantages of an economic downturn is that there are great deals around. The challenge is that many of us are bad at negotiating.
Here, there is clearly an element of nature versus nurture. Some of us are genetically more inclined to haggle, while for others the process is unpleasant and degrading.
The former is often true of salespeople who are typically outgoing and persistent, with a thick hide. But when it comes to negotiating details, many experienced salespeople crumble, especially under pressure from a well-trained negotiator.
Negotiation is a basic skill we use every day, whether making sure we get a cup of tea in the morning from our partner or buying a new set of wheels from a car salesman. Negotiation can be studied and learned so, for advice, I talked to Derek Arden, an expert in the process.
Arden started his career in the training and development operation of a bank, but soon found himself in major account management, negotiating with hard-nosed buyers at a large supermarket chain.
He left the meetings with a strong feeling that he had come a distant second in the negotiations - if only because he was operating solo against a team of four people clearly expert in identifying and exploiting his personal or business weaknesses.
He resolved to read all the books available and go on courses to develop his negotiation skills and has since spent eight years passing on this knowledge. Arden says that developing negotiation skills is a constant process.
Where most people fall down is in understanding timing. In Arden's case, this meant waiting until the bank where he was working was looking for redundancies so he could arrange a favourable exit.
This is particularly relevant in these hard times. For employees with good skills, now is an excellent time to negotiate a mutually beneficial exit.
Arden says the secret of making a graceful departure from your employer is to understand the timing. There will be a perfect time to leave, and forcing your own schedule on their internal processes can be counterproductive.
This follows naturally into the most important element of negotiation: preparation.
The better prepared you are, the more likely you are to secure a good deal. Successful dealmakers always ensure a win for both sides as they are looking for a long-term relationship with the buyer.
The hardest part of negotiation is always the price. Arden suggests having three prices to hand.
First you should have a high-value "dream" price, which buyers will accept more often than you might suspect - for example, if they need your products or services in a hurry.
You should also have a "target" price that represents what you feel the customer should pay, based on value for money for them and a sensible profit for you. Finally, you have a "walkaway" price, below which you cannot go.
In a friendly negotiation, you can even share this information, and a fair buyer should appreciate your openness and respond favourably. Remember that very rarely do people buy the cheapest offer. What is more important is your providing proof of value for money and return on investment.
Arden also trains people in influencing - all based around asking good questions. As Rudyard Kipling put it: "I keep six honest serving-men; they taught me all I knew. Their names are What and Why and When, And How and Where and Who."
Copyright The Financial Times Limited 2009
