There are only a few hours left before the parcels are released. Hundreds of customers will not receive their food. An avalanche of complaints, essentially the end of my business - every caterer's nightmare: "the parcels won't go out". This is what I thought when the carrot supplier was 6 hours late, telling us all the time: "I'll be with you soon". If you work in the food industry, you have probably experienced something similar. I created Flambia Market because in the last 5 years of running diet caterers Primate (formerly Black Monkey Cooks) and Onion Catering, purchasing goods for production has been one of the most difficult tasks, which I decided to solve with the help of Flambia Market.
Before I started catering, I was involved in negotiations on a number of occasions. I negotiated with officials about renting premises for my Brazilian jiu-jitsu club, a licence agreement with a Japanese company for the production of Dragon Ball Z training shirts, the sale of shares to venture capital funds, technology projects such as "Allegro for extreme sports", and finally things strictly related to catering: the purchase of equipment for hundreds of thousands of zlotys, renting more premises as I increased the scale of production, hiring employees, cooperating with, for example, advertising agencies or suppliers of raw materials for production. The most difficult situation for me was a discussion with a supplier of dry products in connection with a contract we had.
"If I don't get a helicopter and a million dollars in unmarked bills right now, I'm going to start killing hostages. Baldy will die first. - For most of my life, that's what I associated with negotiations. Come to think of it, I think I've seen too many films where the main character: "got out of a jam, won the fortune of his life or the love of his life with a clever conversation". At the moment, it seems to me that this is the furthest thing from what business people negotiate on a daily basis.
I make sure the food arrives on time. If not, our chefs have downtime, which causes delays for the whole crew, stress, nerves and therefore costs. It's important to me that I don't have to throw away every other crate because it's broken. Firstly, it's more work for the team, secondly, if some of the goods are thrown away, we're missing out, thirdly, it makes the goods more expensive than the invoice would be, and fourthly, I just can't stand wasting food (yes, I know that's wishful thinking). I care that the price is right. It's not even about being the cheapest. I want to feel that the trader is not cheating me in a bottle and that the price is worth the quality of delivery offered, that it is "fair".
My trader depends on me ordering regularly. His commission depends on my orders. He cares that I treat him as a partner, not as a "supplier", because he spends most of his day at work and would rather spend time with someone he likes than someone he doesn't. He cares that I'm happy with the delivery, because if I'm not, I'll stop ordering or complain. For him, returns are a problem, they cost the company extra money and he has to explain why it went back into stock. He relies on orders being placed earlier, before 12 or 3 p.m., so he has time to plan the whole order, prepare the goods and doesn't have to stay at work after hours.
For me, price negotiation is a situation where I and the supplier say what is important to us and we try to find ways to meet those needs together. I used to take the approach: "I pay, then I demand and let them try". I've changed my thinking. Why did you do that?
I realised that it just didn't work for me. When I had a demanding attitude, without considering the interests of the other side, my partners were not motivated to provide me with the service or goods in the quality I expected. Since then, I see negotiation as a conversation in which I speak directly about my needs and expectations. "But how can they not understand that it is important for us to have the goods on time?" - I was furious. Firstly, it wasn't them, it was the driver, and I was talking to a salesman, and secondly, I don't know if he doesn't understand, or if he's forgotten, or if he's had a situation beyond his control, or maybe our employees have been unfriendly to him, and he doesn't like us, so he doesn't try.
For me, negotiation is the process of setting boundaries within which both parties feel comfortable. I remember a situation where I was negotiating a fantastic deal. I quipped to the salesman that he had to lower his price because he was new or we would go elsewhere, whether he really cared about us as a customer, etc. - I fired off a whole magazine of negotiating 'techniques'. My complacency didn't last long - they said they didn't want to deal with us any more because it wasn't profitable for them and they felt very pressured. They just let it go. That's when I realised that negotiation is different from intimidation - alternative options.
In training with Michal Chmielecki, a phenomenal negotiator who will forever remain my mentor in this area, I learned the most important thing - if you have no other options, you cannot leave the table, that is not negotiating, that is being held hostage.
Why is this worth talking about? There are at least a few reasons:
- It costs nothing to ask,
- We have a chance of obtaining benefits for ourselves,
- Only a madman expects different results by doing the same thing over and over again, believing that maybe the food cost/supply/product/trader (insert any word) will improve on its own, that next month it will surely be better.
- Our partner is not aware of our needs until we present them to him (except perhaps my dear wife, who thinks otherwise, which I must assume).
When I prepare for an interview, I always think about 3 things:
1. Areas - what aspects do I want to negotiate?
2. Goal - what is my goal in each area, what is the minimum I will not go below?
3. Behaviour and attitude - what will I do to make a mutually successful negotiation more likely?
When most people think of space, they think of price. It is not the only, or even the most important, aspect of negotiations. So what if some products are cheaper, if the goods arrive at different times, if they are ordinary, if they are of poor quality, if the logistical minimums are high, if the order times are different, forcing my employees to change their production planning? Price is important, of course, and every business owner's goal is to run a profitable business, but in isolation from the other elements, we create hidden costs, such as an increase in the cost of employees who cannot work to their full potential, or a higher percentage of waste on a product because it is of poor quality.
Areas - the most common things I discuss that have had an impact on my catering are: delivery times, quality standards, complaints policy and delivery in the event of product shortages. There can be value in the equipment used by the supplier. For example, we had a sealing machine in exchange for ordering boxes. Be careful not to get caught in a corner. I have heard of friends who took a fridge and had to order it from a supplier whose prices were 30% higher than the competition. When negotiating such an item, it is important to establish what the conditions of the goods will be. Payment terms are also very important. The ability to obtain credit from the supplier will be particularly important in those types of catering where the goods must first be purchased and then payment for the service or product is made. In the case of diet, event or contract catering, all or part of the payment is often received before the service is provided. Write down the topics you want to talk about. Writing sharpens your thinking; you'll be surprised how much easier it is to organise your thoughts. In your list of issues, highlight the most important ones. If you could negotiate just one thing, which would have the greatest impact on your business?
Purpose - when I was in the business of selling services, I often felt a sense of dissatisfaction when a customer accepted an offer. I would think to myself "I could have quoted a higher amount". The same thing happened the other way round, when I bought equipment or negotiated the terms of a contract, I thought they could have been better. This led to two things. The first was that I was usually unhappy regardless of the outcome. The second was that, without having a set level I wanted to reach, I kept pushing my business partners further and further until they became discouraged and some of the business was lost to me. This taught me to settle down:
Starting offers - the level at which I start the talks. Most likely I will have to give away part of the field. In the case of price, I start 30% lower than I want to achieve.
The target - this is the value I really want to get. It's also about what are the top 3 areas I want to discuss.
Negotiation Minimum - the level below which the deal is unprofitable for me and I walk away. Remember - if there are no alternatives, there is no negotiation. These are questions about which area is absolutely crucial and from which I can withdraw a little? In our case, delivery by 7:00 a.m. is a non-negotiable issue. If the supplier is unable to deliver, we are forced to find someone else.
Manner and attitude - in all types of negotiations where it is not a one-off transaction, my experience is that it does not pay to negotiate from a position of strength. The number of suppliers is large but limited. If we alienate one after another, we will gain a reputation as a company that is difficult to work with. This does not mean that no one will sell us goods, that is the most extreme case, but no one will be motivated to make concessions or help us. When I go into a meeting, I always try to think about what my partner might be interested in, what I can provide at no small cost. What can I give him in our exchange other than money? Questions I ask myself:
The first and most important are the alternatives mentioned. Nothing works so well as the comfort of not having to. If we have 3 offers instead of 1, we don't have to ask, convince, argue. We simply inform the other party about our alternatives. If he offers something better - great, if not - we will use the alternative offer. We also need the alternatives to set the Goal and framework of expectations.
Anchorage - A simple example to understand what anchorage is. Imagine negotiating the purchase of a car.
Anchoring: Start with a position that favours you but is still reasonable. The first offer can set the tone for the negotiation. "Aim for the moon, because even if you don't reach it, you'll be on top of the world". Don't start with the actual target you want to achieve and don't be fooled by questions such as: "then what is the real amount you would be willing to pay?
Reciprocity: Be prepared to make concessions if the supplier reciprocates. This can build goodwill and lead to better terms overall. Is there something I'm happy with that I can tell my partner about? This isn't strictly a transactional element, but it won't hurt the relationship and may make the partner like me more and be more willing to make concessions. Advanced version - ask to contact the manager and write an email praising the salesperson. How many customers do this? You will certainly stand out in a positive way. The salesperson's goal is to achieve the sales target. He can achieve this either by increasing the order value of each customer or by increasing the total number of customers.
Can I order more goods if the price is more attractive?
Are there any friends I can recommend so that the salesman has a chance of increasing sales?
Silence and patience: Don't rush to fill the silence. Sometimes being patient and letting the other party talk can reveal more information and lead to better deals.
Combine: Combine different areas of negotiation (e.g. price and delivery terms) to create packages that may be more acceptable to both parties. As we have seen, price is not the only cost.Collaborative approach: Use language that emphasizes mutual benefit and cooperation. Phrases such as "Let's find a way to..." can foster cooperation.
Data and evidence: Use market research, historical data and performance indicators to support your arguments. Objective data can strengthen your position. It's well known that "free is a good price", but chances are you won't find many channel partners who share this view, so it's worth getting a picture of what it looks like at other vendors. Market intelligence will always be to your advantage.
Float trial balloons: Throw out hypothetical scenarios to assess a vendor's flexibility and openness to different conditions. "What do you think of xyz? Your partner's answer will give you a better indication of their minimum negotiation requirements.
Shift responsibility for finding a solution: "No way", "disagree", "drop out", leave as a last resort. Use questions and ask your partner to find solutions: "In our house, the kitchen needs goods at 7am. I would like to work with you, but the competition gives me a 10% lower price - what can we do to make it profitable for both of us? It is very important to say this with the intention of a sincere request for help in solving the situation, not as a bazaar wacko.
At the end of the day, the most important thing is to have a clear understanding of each other's needs and expectations: to define the bargaining minimum and the other party's goal and needs. If we are seen as a partner who has a goal in mind, who is transparent about needs and problems, who gives constructive feedback, but also sees the positive and appreciates efforts, any agreement will be easier to reach.
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