Negotiation Preparation Guide

Written by Nathanael Okhuysen

Look for other articles in the Negotiation Resources section.

Preparation is Key to Success

We frequently think that the best negotiators are those who are quick on their feet and ready to go at a moment’s notice. We imagine that the ability to negotiate is some innate capability that some people have, and other’s don’t. This couldn’t be further from the truth. The key to a successful negotiation is preparation. Lots of preparation. From background research, to concrete strategy and planning, time spent preparing to negotiate will pay off when you sit down at the table.

This guide lays out six steps you can take to prepare for your next negotiation, and how to use storyboards and graphic organizers to make that preparation both effective and efficient. You’ll find templates that you can use to help in your preparations, and examples to illustrate finished results.

All the examples follow the story of NextWidget, a smart-widget startup, as they prepare to renegotiate their contract with Fabricorp, their manufacturer.*

Step One: Before You Begin

Good preparation needs to rest on a strong foundation of knowledge. Before you even begin to plan a specific negotiation, you should take time to research and reflect on elements that will play an important role in it. What are some points you should be sure to focus on?

First: Know Thyself

You are a participant in every negotiation you enter. If you can be honest about yourself and your position, you can avoid many stumbling blocks of novice negotiators. Before beginning preparations for a specific negotiation, you should know:

Something about yourself and how others perceive you

A "Johari Window" is a simple exercise to record and expand self-knowledge. Self-reflection will yield dividends across a wide range of activities, and may be particularly helpful if you are negotiating as a team rather than as an individual.

Your preferred negotiation style

Are you cooperative negotiator? A competitive one? If you’re not familiar with negotiation styles, read up and reflect on how you feel most comfortable when negotiating. Think about some of your recent negotiations, and how you approached them.

Strengths and weaknesses of your position

A "SWOT analysis" is a great tool to get a realistic and balanced picture of where you stand.

NextWidget SWOT
Create your own at Storyboard That Strengths Weaknesses Opportunities Threats • Multi-talented staff • Valuable IP • Low overhead • Well executed agile development • Limited expertise in manufacturing • Low margins • Limited compatibility environment • Demand projected to increase over the next 5 years • Could integrate well with major SaaS ecosystems • First mover in smart-widget market • Field is open to competition • Compatibility environment could disappear NextWidget S.W.O.T. Welcome to the 1st Annual Smart-Widget Conference! Have you seen the new smart-widgets? It's great! You should definitely get one! I've been thinking of getting one. Do you like yours?


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Second: Know Your Enemy.

It isn’t enough to know where you are coming from, you should also know as much as you can about your opponent.

Imagine yourself in the position of your opponent.

Perform the same examination you have just undertaken for yourself, but from their perspective. If nothing else, organize the salient information you have about your opponent with a spider map, so that you can see it at a glance.

What do they want out of the negotiation?

Consider what the other side of this negotiation is looking to get from the negotiation. Be cautious not to jump to the conclusion that they want to nickle and dime you. Many times, “opponents” are potential collaborators, if your interests align sufficiently.

What is your relationship with the other side?

Are you familiar? What is the history? Consider making a timeline to organize this information. Trust is an important factor in negotiations and your history with the other side will be a big component of that.

Third: Know the Terrain.

If you’ve already done a SWOT analysis, you’ve begun to think about some of the environmental factors surrounding the negotiation. These can be further explored on a macro level with frameworks like Porter’s five forces, or a PEST analysis. Other things to research and consider include:

Who is watching this negotiation?

Even private negotiations have audiences. Negotiators on both sides may have stakeholders they are reporting back to, or competitors who will catch wind of the result. Some of the most important audience members are in the room, since every negotiator wants to be able to walk away from the table with a winning narrative.

What are some ground rules you want to have for the negotiation?

Are there any resources your opponent is likely to want? What issues are off topic or out of bounds?

Information about your industry

Any information about your field or industry can be helpful, and will likely be useful in the future anyway. You may not even think about this information during the negotiation, but it will help orient you and inform your preparations.

Use the templates below to make your own SWOT Analysis or Johari window.

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Step Two: What Are Your Objectives?

An often neglected aspect of negotiation planning is to really consider what the objectives are. It is easy to lose perspective and jump to an obvious conclusion then pursue that objective throughout the negotiation. Hasty conclusions may not be as beneficial as they first appear, and may crowd out creative alternatives.

Consider what you need out of the negotiation, and what you want out of it. “Needs” are those objectives that are inflexible and will require you walking from the negotiation if you cannot get. They also include those things that you can’t do, either because it is out of your power, or it is not worthwhile. They form your bottom line and should not be conceded.

”Wants”, on the other hand, are objectives that can be traded away, or modified in some way. Even if they are valuable, not getting them will not make the negotiation unsuccessful. They should be traded away for “needs”. They also form fertile ground for creative collaborations, since they can change to accommodate the needs and wants of the other side.

Start by brainstorming things you’d like to result from this negotiation. Divide the results into “needs” and “wants”. Combine your “needs” into a bottom line, and see if there are any “wants” that are incompatible. Consider ranking the remaining “wants” by how valuable they are to you.

Step Three: BATNAs and Best First Offers

Since not all negotiations are successful, you should be ready to walk away from the table. You already know what you need from the negotiation, and have a bottom line, but you should be prepared with a Best Alternative to a Negotiated Agreement, or a “BATNA”. There are four steps in formulating a BATNA:

BATNA Spider Map
Create your own at Storyboard That Manufacture In-House MegaManufacturing, Inc. Sell Company License Widget IP LocalMade, LLC • 3D printable? • Growth opportunity • Steep learning curve • Comparable price per unit • Poor customer service reputation • Finally get a vacation • Potential buyers? • Major shift in company goals • Call Gretchen @ Acme Corp. to follow up • ~12% increased manufacturing cost • Office in our building • Flexibility Alternatives What do we do if we don't renew our contract with Fabricorp?


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In evaluating your alternatives, you may be able to use a number of very specific metrics, but even a very general analysis can be covered by dividing information into solid data, clear strengths, possible weaknesses, and other pertinent information. Illustrating the most salient point in each category will make the comparisons more striking.

NextWidget Alternatives Comparisons
Create your own at Storyboard That Image Attributions: flowchart ( - Sean MacEntee - License: Attribution ( LOCAL STARTUP PIVOT CHEAPEST OPTION WE LIKE THEM COMPLETE CONTROL BUSSINESS AS USUAL EXPENSIVE COMPLICATED / DISTRACTION POOR QUALITY SOCIAL SCARY COMPETITION • Young company (c. 2011) • ~12% increased manufacturing cost • Located in our building • ~6% reduced manufacturing costs after 1 year • ~11% reduced manufacturing costs after 18 months • Immediate capital costs: ~$560k • Established company (c. 1993) • 1-2% reduced manufacturing costs • Direct competitor to Fabricorp • Located in Nebraska We already have a friendly relationship with the staff. They are in our building, and it would be easy to work with them to solve any problems that come up. They might be more willing to adapt if we new products as we develop them. An option that gives us complete control over manufacturing and a better handle on fulfillment. It is a growth opportunity for the company, that could save us money in the long run. This is the option most similar to the status quo. Relatively low costs (maybe even better than our current rates) and few required changes in our company strategy. It cuts into already slim margins. Also, they may not be able to scale up if we need to quickly increase output. This would be a major shift in our operations, and falls well outside our core competencies. The learning curve is steep. There would also be initial capital expenses. They have a poor reputation for customer service. We may lose valuable time fixing problems and putting out fires. I like the idea of working with other startups. I think it is good for the company's image and network. It's fun. This scares me a bit. I'm not sure if that's because of the risks involved, or just because it is so different. They are a competitor to Fabricorp, so mentioning them in the negotiation may give us some leverage, in this negotiation or future negotiations. LocalMade LLC Manufacture In-house MegaManufacturing Inc. UPSIDES DRAWBACKS OTHER FACTORS DATA