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What Is Negotiation and Why Does it Matter?

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Negotiations are an exceptionally important part of the business world. Successful business negotiations are important for a company, but it may be hard to see why negotiation skills need to be honed and practiced over time. The fact is, there are several benefits to constantly improving your business negotiations.

Understanding what negotiations in a business context truly mean can help improve your business’s growth and revenue. When you ensure strong negotiating skills within your company, you’ll see more business deals and partnerships produce profits or benefits. Even when the perfect solution isn’t possible, negotiation skills can bring about a concession that still has benefits. Effective negotiating strategies create great benefits for your business.

What Is Negotiation in Business

At a basic level, negotiations in business involve two or more parties discussing how they can come to an agreement. The parties could have a common interest or something they can both offer the other. The negotiations themselves could be about a number of things, such as a partnership, an acquisition, or a conflict.


The goal in negotiation is not to beat the other side but to arrive at a win-win solution that provides mutual benefits. Each party is going to have different priorities and goals, and this will likely require compromise in order to reach those benefits. An inability to compromise will result in a stalemate and a breakdown in negotiations. It’s important that both parties communicate their interests and needs for negotiations. The greater communication between parties, the greater cooperation that can be achieved. All of this requires careful skill and planning to reach a beneficial agreement.

How Does Negotiation Help Your Business

The benefits of good negotiating skills not only impact the outcome of agreements, but they can also improve a number of aspects of your business. When you understand the fundamentals of effective negotiation, you’ll see several benefits.

  • Creates Open and Beneficial Negotiations

Without full understanding of what makes good negotiations, one or both parties may go into negotiations with an antagonistic mindset. This will not create the great benefits of a win-win scenario and will instead sour any potential business relationships, even if you receive short term benefits.

Alternatively, when both parties understand that negotiations are meant to be cooperative, everyone can benefit. Open communication and honesty about what you can offer and what you’re willing to concede can go far in a successful business venture.

  • Adds to the Confidence of Negotiators

When you enter negotiations with the necessary knowledge and preparation for effective negotiating, it shows. When you’re unprepared for negotiations, you may end up too focused on how the other party will outmaneuver you. Confidence will allow you to focus on the negotiations at hand because you’ve prepared for several potential outcomes. It can also help you avoid any potential intimidation tactics that some business negotiators may bring. When you begin negotiations confidently, you’re more likely to see positive results.

When you enter negotiations unprepared, this lack of confidence will also show. If the other party takes advantage of it, you may end up losing more than you gain in negotiations. The more knowledge you have of effective negotiation, the better equipped and more confident you’ll be while reaching agreements.

  • Prevents Issues

Often, the goal of negotiations is to solve a conflict or a problem. Businesses can see professional and personal conflicts that can be resolved with strong negotiations. These negotiations can be even more effective when these problems are predicted and discussed before they occur. For example, if you’re negotiating an acquisition, you can discuss potential problems before the transaction goes through and decide how each party will deal with that issue.

  • Builds Respect

When you efficiently and skillfully negotiate an agreement, you can make an impression with the other party that builds over time. Just as you want employees to respect you, you want those you negotiate with to have respect for your company. Failing to properly handle a negotiation can influence who makes agreements with you and impact your reputation negatively. Being known as someone who negotiates well can open future partnerships.

  • Improves Everyday Business Interactions

Negotiation is certainly useful for business agreements and employee meetings, but the mindset that comes with effective negotiation helps beyond that. Negotiation teaches you how to better frame your ideas and goals and how to communicate these ideas with employees, vendors, and other companies effectively. It can also help you to better outline expectations to employees or a business partner without coming off as hesitant or aggressive.

  • Benefits the Bottom Line

The main role of negotiation is to improve revenue and profit. By creating win-win outcomes to negotiations and increasing the benefits your company sees, you are going to increase your bottom line. Without those negotiation skills, you may see some benefits from agreements. However, the research, preparedness, and confidence that come from understanding negotiation can significantly increase your likelihood of profiting from an agreement.

How to Improve Your Negotiation Skills

Negotiation is going to remain an essential business skill. Practicing the skill of negotiation and ensuring the rest of your business is doing the same can bring severe profit and partnership values to your business. If you haven’t done much to practice negotiation, it may seem difficult to know where to begin. At Shapiro Negotiations Institute, we offer professional negotiation training. If you’re an industry executive or business professional who wants to improve your skills or the skill of your team, contact us today. We offer several options for negotiation training to help provide you with direct benefits.

I'm a passionate full-time blogger. I love writing about startups, how they can access key resources, avoid legal mistakes, respond to questions from angel investors as well as the reality check for startups. Continue reading my articles for more insight.

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