Negotiating under high pressure: 5 steps to keeping the critical situation under control.
If the economy or a particular industry suddenly spins into a crisis as the result of an external factor, business partners often find themselves thrown into a situation overnight where they are subject to pressure from several directions. A supplier to the pharmaceutical industry increases the price of a crucial raw material for high-demand medicines by 80%. A tenant demands a 70% rent reduction for the next 2 years. A construction company pays the downstream tradespeople only 50% of the original price for their services.
In the present circumstances, Corona is such an external factor. But it could just as well be a sudden surge in oil prices, a raw material shortage, war, an earthquake, etc.
What to do if the pressure in negotiations suddenly ramps up?
If business partner B acted like this in a ‘normal situation’, business partner A would go to court and/or swap business partner B for business partner C. In a crisis, you have neither enough time to do that nor any choice. This creates multiple pressures:
• Your own company is under pressure.
• Your business partners are under pressure.
• The entire value chain and all of society are in the throes of a crisis.
• No one knows how long it will take. This adds to the mental stress.
What are the best steps you can take as an entrepreneur when there is pressure from all sides?
Keep holding out against the pressure: 5 specific steps for your negotiation
What’s important is to keep your cool and to take decisions calmly:
1) Don’t jump to any hasty conclusions:
You don’t know the motives for your business partner’s behaviour yet. Perhaps there is a shortage of raw materials, perhaps your tenant is in financial difficulties and perhaps the construction company is unable to sell services and is struggling to keep afloat.
2) Contact your business partners:
Ask them to explain their behaviour. See also “Renegotiating contracts in times of crisis“.
3) Point out the consequences to your business partner:
Address your business partner’s concerns directly and show understanding. Also make clear to your business partners how their actions will impact the entire value chain. For example, that loan instalments, tradespeople and operating costs can no longer be paid. In times of crisis, people often react with alarm and develop tunnel vision – all they see is their own reality and they are unable to look further ahead. Help them to widen their perspective!
4) Take time over your decisions:
No decision has to be made on the spot. Have several negotiation rounds and make sure to get away from it all every now and then. This will help you to keep a clear head.
5) Think ahead
First develop a strategy for yourself. Ask yourself: What is the worst-case scenario? Ideally, where do want to be headed? Turn if-then scenarios over in your mind beforehand and try to plan 2 or 3 steps ahead.
The crisis is a snapshot
Consider this: On the stage of human history, a crisis like this is a mere snapshot. No matter what people have had to endure in the past, they have always found ways and solutions. That’s what it’s going to be like this time around, too: We will weather this crisis and emerge stronger.
Do you currently have to negotiate under pressure, and would you like some assistance with that? I would be happy to analyse your specific situation with you or support you at the negotiating table.You can reach me at: firstname.lastname@example.org or +436602400135.
Your Raluca Ionescu