Business Negotiation and Deal Making: A Guide for Small Businesses

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Pitching and Negotiation Skills

Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
Task 2.............................................................................................................................................20
Conclusion.....................................................................................................................................26
Bibliography..................................................................................................................................27
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Introduction
Good and successful negotiations are the key to success for every business organisation. The
future of an organisation depends on the negotiating capability of the business. The better the
capability, the better chances for the business to survive. The industry is highly competitive and
ruthless. Companies will always try to get the better end of a business deal when conducting
negotiations. The higher the benefits from a negotiation, the more successful the business will
become. This booklet will aim at providing advices to small businesses and start-ups on how to
conduct negotiations successfully. The process of negotiation is explained along with preparing
for negotiation through a request for proposal (RFP) form. The contractual process and
agreements to consider in a deal are also explained.
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Task 1
Table of Contents
Introduction......................................................................................................................................5
Chapter 1. What is a negotiation in the business context?..............................................................6
Chapter 2. The key steps for negotiating and generating business deals.........................................7
Chapter 3. The context of negotiation and the importance of key individuals in a negotiation......9
Chapter 4. How to gain the best deals/contract.............................................................................10
Chapter 5. How to generate new business and win deals..............................................................10
Chapter 6. Tendering for contracts................................................................................................11
Chapter 7. Preparing for negotiation through a request for proposal (RFP) form.........................12
Chapter 8. Responding to RFP – creating a business proposal.....................................................14
Chapter 9. The contractual process and agreements......................................................................15
Conclusion.....................................................................................................................................17
Bibliography..................................................................................................................................18
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Introduction
Negotiation is one of the most important aspects of business. It is the process of discussion
between two individuals or groups who have different aims and ideologies, to come to a
mutually agreeable conclusion or decision. In negotiation, people try to express their viewpoints
on a topic to each other so that the parties can understand each other’s viewpoints.
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Chapter 1. What is a negotiation in the business context?
In business, negotiation is the process where two different individual people or businesses come
to a proper conclusive decision by explaining their viewpoints on a certain situation to each
other. The parties involved in the negotiation have different viewpoints on the same subject.
Negotiations in business are based around removing any possibilities of conflicts between
business organisations and businessmen by coming to a mutually beneficial conclusion.
Negotiation in business is used in many scenarios, like during business deals, acquiring and
attracting new shareholders, and build better relationships with people or organisations with
whom a business is dealing with. The negotiations are done by business when either a deal is
involved or to solve conflicts between different parties. These negotiations are done in way
where all the parties present their ideas in order to tip the favour of the negotiation deal towards
them. This is done by the parties so that they can get the better advantage or benefit from the
deal. Business owners take part in negotiations so that they can win business deals and take
advantage of opportunities that come their way. Through this, businesses achieve their objectives
and gain competitive advantage in the market (Steele and Beasor, 2017).
It is important for the negotiator or the businessman to have excellent communication skills so
that they can express their ideas to the other parties successfully and win the deal. Excellent
persuasion skills are also necessary for the negotiators to persuade the others in his or her favour.
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Chapter 2. The key steps for negotiating and generating business deals.
It is important to keep in mind that negotiations in business deals do not have a definite winner
or loser. Instead, the businesses try to even out the advantages each of them have. Though that is
only in theory, businesses in general try to outsmart the competition by gaining an advantage in
the negotiation process. This helps the party to gain better benefits from the business deal.
The process of negotiation has five steps – preparation, discussion, proposal, bargain, and
settlement.
Figure 1: Process of Negotiation
Preparation: Preparation is the first step of the negotiation where the negotiating parties research
about the topic of negotiation – that is usually a business deal. The parties conduct research in
order to gain knowledge about the topic of negotiation. It is widely believed that the person with
the most knowledge about the negotiation or business deal has the ideal advantage in the
situation. The higher amount of available knowledge allows the party to find the strengths in the
deal and make propositions to exploit those points (Geiger, 2017). Gaining knowledge is
important in negotiation as it allows the party to be knowledgeable in the negotiation and also
able them to formulate a plan that will allow them to achieve their goals through the negotiation.
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Discussion: Discussion is the next step in the process of negotiation, where the negotiating
parties put forward their ideas to the table. Each party takes turn in presenting their ideas to the
other party. This step is very similar to a debate. Negotiating parties ask questions and present
statements that point out the wrong statements present in the viewpoints of other parties. The
negotiators discuss the topic in detail so that all of its aspects are covered and understood by both
parties (Groves et al., 2015). Good communication is very important in this step in order to
present the viewpoints in a clear and concise manner so that it is understood by the other parties.
Proposal: In this step, the parties propose to each member various points of the discussion that
the parties need to consider for reaching a definitive conclusion. All the parties put forward plans
to the other parties regarding the business deal. The members also clarify their proposals so that
it is understood by others (Singer, 2018). Any discrepancies present in the proposals of the
members are also corrected in this stage.
Bargain: This is one of the most essential steps in negotiation. This is where the party members
decide on the final outcome of the business deal. The various facets of the deal are discussed and
concluded in this stage. Since business deals involve transactions from each party, everyone tries
to tip the deal in their favour in this phase. This process is similar to buying and selling, where
the sellers demand a price for their deal and the buyer tries to lower it by giving suitable and
justified reasons. The magnitude of bargains depends on the communication skills of the
member. All the party members place their demands in the deal and it is adjusted according to
various propositions place by each other (Ott et al., 2016). Businesses always try to gain the
advantage in the deal during this stage.
Settlement: This is the last and final stage of the negotiation where the final proposal is selected
as per the satisfaction of every party. Business deals and transactions require bonds and
settlements to be signed and authorised for validation. It is important to understand that a
settlement can only be reached if all the parties agree to the deal. In case a party is not satisfied
with a deal, then the bargaining process continues and adjustments are made to finalise a
settlement and reach a conclusion (Artinger et al., 2015).
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Chapter 3. The context of negotiation and the importance of key individuals in a
negotiation
There can be many contexts that can influence the negotiators and lead to the negotiation of a
business deal, like social contexts, religion, beliefs, laws, and many more (Li et al., 2018).
Negotiations are important for businesses as it allows the company to collaborate with other
firms in order to buy and sell products and services that will allow them to enhance their
businesses. Every business organisation needs to conduct business deals that require negotiation
with other businesses. For example, if a business wants to acquire a service from another
business in bulk, the businessperson can make negotiations with the leader of the other business
in order to lower the prices of each unit of the service, providing a clear justification to the deal,
like buying a large amount in bulk.
Successful negotiations require excellent communication skills, so that the parties can present
their ideas and proposals to the other parties clearly and concisely so that no confusions and
conflicts arise. Good negotiations in deals with other businesses can have an impact on the brand
image of a company as successful and well planned negotiations will allow the other parties
perceive a professional and good brand image of the company. Satisfying each individual in the
negotiation process is important, as settlements will only happen if all individuals are happy.
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Chapter 4. How to gain the best deals/contract
A company can get the best deals only if they have effective communication skills. These
communication skills will also develop the negotiation skills of the business leaders. Having
good negotiation skills is beneficial for a business negotiator as it allows them to get the best
beneficial deals by conducting successful negotiations. Every successful negotiator has a plan in
mind when they conduct negotiations. They research about the deal beforehand and make
strategies and tactics accordingly. This will allow the party to know the various factors that can
allow them to gain the edge in the deal and gain better benefits (Brett, 2017).
The point of the negotiation is to come to a conclusion or settlement after deciding on the various
terms and conditions of the deal. Parties do negotiations so that they can get the upper hand in
the deal and tip the deal in his or her favour.
Chapter 5. How to generate new business and win deals
In order to generate new business and win deals, the first factor that is to be taken into
consideration is the factors of the negotiation like available resources and strategies and plans to
implement in a deal. An organisation needs resources to conduct operations. An organisation
with a good amount of resources will allow the company to gain an advantage in the negotiation
process in a deal. This is especially helpful if negotiations are done with the suppliers of the
organisation and the investors (Wertheim et al., 2019). Good communication skills will allow the
business to strike better deals in availing discounts from suppliers, and gaining the trust and
confidence of investors and shareholders.
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Chapter 6. Tendering for contracts
Tender is used in the businesses for supplying products and services to other businesses in the
public sector. Business generation is found to be the complex task which is linked with driving
of the tough bargain in the competitive world. Tenders are mainly created in the form of legal
contract based on the external and internal analysis of the business microenvironment. Using
this, the management of the local council can take decision on the bidding process. They do the
identification of the requirements of the tender and other brainstorming activities. After
analysing the terms and condition of the firm, the business decisions will be taken. As mentioned
by Flynn (2016), negotiation is an important part of business deal which is associated with the
bargaining process of the organisation.
Being an advisor of Greenwich local council, it can be suggested that business generation is
highly linked to have an effective knowledge of the business. Moreover, it is essential to ensure
to have a continuous comparison and haggling process for having benefits in the trading system.
Hence, it is important for the SMEs to have planned resources in business to understand the
current trends in the society for having benefits in business (Shmaliy and Dushakova, 2017). The
tender of contract will be prepared according to the nature of the business and its demand in the
market. This can help the marketers of small businesses to gain potential regulatory bodies for
the gaining business permission.
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Chapter 7. Preparing for negotiation through a request for proposal (RFP) form
RFP (Request for proposal) is the essential document for developing different small project.
When the proposal gets developed, it is used as an important document for presenting actual
business idea of the organisation. The tool directly provides help to the procurement of project.
RFP is the formal document that is used when the main party and bidders works together using
effective communication. It holds the primary scope and details about the project and it is linked
with the contractual process. As opined by Rajbhoj et al. (2019), RFP offers independence
among the vendors for gaining ability in choosing the ability to work. This would help in
monitoring the business contract effectively. In the case of small businesses, it is essential to
describe the details about the project for gaining reliability in business formation. On the
formation of research proposal, it is important for every party to gain information that is related
with the bidding. It aids in proper interaction process among the customers and vendors that is
required for developing effective decision in the project. Development of RFP offers different
range of bidders those are invited to join and win the business opportunity.
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