My 9 Tips in Business Negotiation
Since the first day I run my business, I know that it is very important to learn the negotiation skill for our businesses. In fact, in our life if you are good in negotiation skill, you tend to get a lot of good deals and benefits from people. At least you can get what you think is reasonable and fair when dealing with others.
So what is Negotiation Skill?
To keep this simple, negotiation is a way of communication between you and others in order to find a line that both of you agree. Negotiation always happens in business and it is very important for you to learn the negotiation skill for both your business and your job. In business, you have to negotiate with 2 main parties – your customers and your suppliers.
Sales Negotiation - Sometimes customers will negotiate with you and you have to learn how to reply and negotiate with them so that you can get the profit you want. The most important thing is to make your customers happy to pay for your products and services and come back in future. Yes, if you good in negotiation, you will make your customers happy with your business and become a repeated customers in future.
Purchase Negotiation - On the other hand, you have to negotiate with your suppliers or manufacturers. In this condition, you are a customer to them. You have to negotiate with them so you can get a better deal and lower costs from them and hence increase the profit margin for your business.
Tips on Business Negotiation
Don’t worry, business negotiation can be learnt by gaining experience.
When I start my business, I really feel overwhelmed and always make mistakes in business such as making a bad deal, make my customers angry and so on. This is because I am weak in negotiation and communication with my customers. However, I keep doing and today, I learnt the most basic skill of negotiation and my business starts running smoothly.
The conclusion that I get is actually this business negotiation skill can be learnt from our life. All you have to do is be patient and learn from the mistakes you made along the way.
So today, I want to share with you some of the 9 tips that I learn in last few years that help me a lot in business negotiation. I wish my 8 tips can help you too.
- Be confidence about your business. In earlier years, I always fail in negotiation because I’m lack of confidence and doubts about my business and my products or services. Customers can feel this and use this point to attack me. So I start learning about the Strength and Weakness of my products or services. The more I learn the more confidence I have. Now I can speak loudly that my services are the best and my customers trust me because of my confident level.
- Learn about the market and do something that is different. Customer tends to do their research when they want to pay money for something. Every one of us wants to get something that worth the price and be treated specially. So I usually do some research and understand my market. Then I just slightly modify my services and do something different from my competitors. Now my customers always come back to me because we are different compare to others. How I know this? My customers are telling me!
- Prepare the reasons “why”. Business negotiation just like a war and you must well prepared in order to win the negotiation. So you must prepare the reasons or “why” that will help you to defend your price, business or services. From my experience, price negotiation happens very often in business. So you must get ready the reasons and why a customer should pay more for your services and products.
- Prepare your Up selling plans. It is good to have plan B to support you. If you really fail in defending your offers, especially in price negotiation, you can always use your plan B – up selling other products or services to your customers. This not only can push up your profit margin but also help you to increase your sales volume.
- Understand your customer. Spend some time and learn the negotiation pattern of your customers. This will be a great weapon for you to deal with customers with different kind of characters.
- Build Rapport with customers. People tend to trust their friends and do business with their friends. So if you can build rapport with your customers and make friends with them, a lot of meaningless negotiation will be avoided and in most cases you can win in the negotiation easily too. This is the method that I am using in my business and it really helps me a lot. Of course, you must really make friends with your customers and really care about them and not just make friends because of business. They can feel this.
- Learn how to say “NO”. In the earlier years, I always fail in negotiation because I don’t dare to say “NO” to my customers. However, I found that in certain conditions, I must say no and reject my customers. Sometimes they are demanding a lot and over the limit. If this really happens, I have no choice but have to say no to defend my business. Something I found is if you can say “no” in proper way, you actually comprise your customers.
- Learn how to let go. Try not to view negotiation as a contest that must be won every time. This will indirectly give a lot of stress on you and create more difficulty down the road. So if you really can’t win in 1 negotiation, just let it go and focus on the next one. Learn from the failure and win more in future.
- Choose your customers! 80/20 rules. There are a lot of people with different kind of characters. Because of this, I understand that my business will not 100% help and make everyone in this world happy. So choose your customers. In most cases, 20% of your customers support your 80% of business sales. So spend time to spot these 20% customers and focus on them rather than dealing with those customers that spend most of their time in complains and negotiation.
Above is what I learn and use in my business. I hope the tips can help you in your business too. If you have anything that is better than my tips, please share it here.
Do you have any tips on negotiation? Why not share it here with me and others. We will appreciate this. 
How to Make a Plan to Achieve Financial Freedom, Part 3
Previously, I shared the first 2 parts of How to make a Plan to Achieve Financial Freedom. First part, we discuss how to test and know your current financial status and problems. In the second part, we discuss how to set a goal on how much passive income you need to achieve financial freedom. Both of them are in the preparing stage of this plan.
So in this article, I’m going to discuss how and in what way you can start your journey to achieve financial freedom
How to start the journey?
I always suggest people to start the journey according to the following steps:
- Start a business or build an income source that will generate excessive money for you.
- Manage the excessive money in a proper way
- Invest the excessive money to generate passive income
I elaborated each of the steps below:
Start or Own a Business that Generate Excessive Money
I always recommend people to start by building up a business or any other income source that will generate excessive money to them. In fact, I’m also doing this to achieve my financial freedom.
Let me define the meaning of excessive money:
Excessive money means the amount of money that can pay out all your living expenses and at the same time provide extra money for you to invest and build up your assets.
There are 2 reasons why I recommend to get started in business first:
- Protect Yourself. In my post, how to start a part time business that protects you financially, I already pointed out the important of a business to us. It can generate income to you and help you to build up your assets or as a protection for you at the emergency moment. Of course, business is not the only way to generate excessive money and you can also use your abilities to build up any other income source. As long as it can generate excessive money for you.
- Lower Your own Risks. We are not born to be an investor and in most cases we tend to lose money in starting. However, the more money you lost the more experience you will get and finally you can be a professional investor. I can tell you that learning from your mistakes and errors is the best way to improve. Yes, it is really pain to lose money but because of this you will remember your error very well and make a better investing decision next time. So if you have excessive cash, then the risks of losing money will be lower since it does not affect you life.
Manage the Excessive Money
No matter how much money you make, you must learn how to manage your money. In most cases, people fall deeply in debt not because of their low income, but because of their spending habits and weak in money management.
So even you have some kind of income source or business that generates excessive cash for you, you still need to learn and have a plan to manage them. If not you still can fall into the money trap.
Here, I will recommend you to start a budget. This is the best way to manage your money and gain control over your money. You plan how you spend and spend according to plan.
Now you can use the information that you collect in part 1 of this series and compile your own budget accordingly. Please remember that you must include emergency and investing funds in your budget.
Invest the Excessive Money
By carrying out a budget for your money, each month you will have some money ready for investing. This is one of the reasons why we must start a budget. However we cannot simply go out and dump the money in any investments and wait for the returns. We are trying to learn and invest like a true investor and not a gambler.
I have some suggestions for you:
- Decide what kind of investment you want to start. There are a lot of investment in the market such as real estate, stocks, forex, bonds and etc. So you must decide and select 1 or 2 of them and focus on them. I suggest choosing 1 or 2 of them because it takes time for us to train ourselves to make money from 1 investment. So if we start with so many investments, we will easily get confused and overwhelmed until we stop taking any actions. So we must start small and take baby steps all the time.
- Invest in your brain. There a lot of information we have to absorb and learn before investing our money in one investment. Different kind of investment will have different kind of terms, options, tools and strategies to be used. So in order to learn all this skill, you must read books, attend some courses or even pay a mentor to guide you in this. This is what I called invest money in your brain because you exchange knowledge with money. However, once you learn enough, your brain will put back some “gold” in to your pocket.
- Take some simple actions. I believe we can always leverage on the baby steps to train up ourselves easily. For example, if you choose stocks as your first investment target, then you can start with some free stock simulators and make yourself familiar with the market by using the virtual money. This is a good choice for you to gain experiences without losing any real money.
- Start your investment journals. By keeping a journal, you will keep down your journey to learn something. From there you will keep down what you learn, what mistakes you made and how the market change from in the previous year. This will make your mind clear about what you are doing every day. At the same time, compile and prepare your own investment strategies. The more knowledge you get, the better analysis and decision you can make. Then finally you can start making your own investing plan and strategies to invest.
- Don’t Give Up!
Coming Up next : Next part will be the last part of this series and I wish to discuss the power of mindset in your plan to achieve financial freedom. So stay tune, my friend.
At the same time, why not share with us your action plan to achieve any financial goals?
Improve your FICO Score to achieve Financial Freedom Faster
FICO score or Credit score is a number between 300 and 850 which is given based on a person’s credit report. This is a number that represent the creditworthiness of a person.
How FICO score affect your Journey to Achieve Financial Freedom
To keep it simple, FICO score is a number that bankers and lenders read to analysis how good your credit is. They don’t know about you and FICO score will be a tool for them to understand you. Usually they will use this number to determine their risk of lending money to you.
Because of this, FICO score is very important to determine:
- Whether you will get a personal loan and mortgage.
- The interest rate you get on those loans
In the Journey to Financial Freedom, we will get a lot of loans and mortgages. We might get a business loans to start our business or support our new idea to make money. In real estate, we will leverage on mortgage to own as much as rental properties or assets. This will build up our passive income and wealth.
Besides that, sometime a high interest rate loan or mortgage can easily ruin your investment. Your expenses will be increased due to the interest and a positive cash flow investment might become negative because of this.
So FICO Score is very important for everybody especially if you want to achieve financial freedom and become rich. This is why we must know how FICO score works and how to maintain and increase it to higher rate.
How FICO Score being calculated?
Maybe we should know the basic of FICO score and learn how FICO score is calculated.
FICO or credit score ranges are broken down as below:
720-850 – Represent the best score range
700-719 – You can obtain favorable financing terms with this
675-699 – This is still a decent score range
620-674 – Start to have trouble obtaining favorable credit terms
560-619 – Have more trouble
500-559 – You have to improve your score
And your FICO score calculated according to the percentage below:
35% - Payment History. Considers
- your payments of mortgage, credit card, car loan and other installment.
- Information from public records such as bankruptcies
- Details of missed or late payments such as amount and how late it was.
30% - Amounts Owed. Considers
- Total amount you owe
- The mix of amounts owed
- The number of accounts that have balances
- How much you max out your available credit.
15% - Length of Credit History
10% - New Credit. Considers
- How many new credit account you have opened
- How long it has been since you opened a new credit account
- How many request you have made for credit
- How long it been since lenders have request credit information on you
- How good your recent credit history has been
10% - Types of Credit Used
6 ways to improve your FICO score
- Pay your bills on time. I think this is the best way that you can take
- Keep credit balance low. Leave some breathing room between the amount of debt and your credit line. Keep it below 25% is the best.
- Do not open a lot of new accounts over a short period.
- Do not open too many credit account that you have no intention to use.
- Pay off your debt instead of debt consolidation.
- Keep and mange your credit card properly because having credit card and installment loan that you pay on time can help your FICO score.
Conclusion: It all about your money habits
I visit a lot of forums and read a lot of articles about personal finance. I also meet a lot of people because of my business. One conclusion I get is those who fall into deep debt because of their habits on managing their money. Most of them just spend their money emotionally. They simply buy something that they want or not even need and important. They don’t have any financial goals or planning.
Since the first day I started my journey to financial freedom, my mentor already told me that I must learn how to control my buying desire and delay my gratification. He always reminds me that we must buy our toys with investment and this is the best way to buy liabilities.
So is there any way that you are using now to control your bad money habits in order to achieve any financial goals?
