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Tony Levene

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During my 30+ years as a financial journalist I've helped thousands of people stand up for their consumer rights and fight back against companies who all too often seem more interested in profit than their customers. You can read all my latest views, tips and scam alerts right here and please let me know about any recent scams you've encountered.Tony Signature

Deal or no deal?

By Tony Levene, published 05 May 2010.

How can you turn business weaknesses into your bank balance strength?.

One in three of the UK’s small businesses are rubbish at bargaining to get the best deal for themselves and their firms. And that's just the ones who recognise their weakness in this area – or are prepared to admit it. So it's likely that the percentage of small business folk with poor negotiating skills is higher than the 31% who owned up to overpaying to researchers for a survey for phone operator T-Mobile.

And let's face it, it's not just businesses who are poor at negotiating, it's an area where most of us could improve.

The T-Mobile figures relate to small firms' relationships with their own suppliers. The near one in three who confess to saying deal when it should be “no deal” end up paying over the odds on a wide range of goods.

This can include catering firm owners fail to get a good price when they buy raw materials for their dishes to van hire operators who pay over the odds for their vehicles and servicing.

But if this one in three is bad at controlling its own costs, then there could be advantages for consumers who are prepared to haggle. Like martial arts experts, the trick is to turn their weaknesses into your strength.

So here are some nuggets from the figures – and how you can convert them to your advantage.

  • Nearly a third of small business owners or managers (31%) do not see themselves as naturally strong negotiators. Give them a lesson. If you have a choice of more than one firm, then make it clear that you are asking them to tender for the work – and that the best offer secures your business. But don't push them to the brink of bankruptcy – a good negotiator lets the other side save face. It may be easier if you ask for an upgrade or some extra work rather than a cash reduction. In any case, if you force the price down too far, you might get a sub-standard job.
  • 38% of small business leaders expect suppliers to quote an unreasonably high first price Knowing that is a key to a better deal because firms that expect to be quoted over the odds will often try it on customers to get their excessive payments back. You have near enough a four in ten chance of meeting someone like this. If the firm you're dealing with expects to haggle its way to a lower price, then it won't be surprised if you bargain.
  • 63% of small business owners or managers have walked away from a supplier who has quoted an unreasonable first price That should mean nearly two out of three businesses won't be surprised if you walk away. Walking away does not mean the end of negotiating – just a sign that mean business on your own terms.
  • One in ten (10%) only try to negotiate when they are having cash flow problems Oh dear! They probably have cash flow problems because they didn't negotiate before. Just because you might be feeling flush that month does not mean you should not get the best deal going. You are not a charity.
  • One in eight (13%) business bosses believe negotiations won’t make any difference. Obviously, you won't get too far bargaining at Tesco. But many small businesses will be flexible – especially if you are spending a substantial sum and make a special order. After all, that way, the business does not even have to hold the stock.
  • A further one in eight (13%) small business owners say they don't have time to negotiate. Time is money – but only sometimes. These firms may be happy to get your business speedily – on your terms. Remember bargaining gets easier (and faster) with practice.
  • One in three (32%) feel uncomfortable or stressed when they are negotiating with suppliers. There's no easy answer to this other than practice makes perfect.
  • Three out of four business bosses have had no negotiation training and almost the same number offer none to their staff.

That's a good chance for you provided you learn about how to negotiate. There is plenty of online help try http://sbinfocanada.about.com/cs/marketing/a/negotiationkr.htm – it's Canadian (but applies universally across the globe) so the other side will probably never find it or its hints!

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Tony is an award winning financial journalist and author. He firmly established himself as a 'Consumer Champion' during his 11 years at the Guardian, tirelessly fighting consumer issues on behalf of readers, and collected a well deserved ABI Lifetime Achievement Award. Tony is also a well known author, with several financial titles under his belt.

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