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Whether you’re trying to get a better rate, looking for a lease or discussing vacation plans with your spouse, negotiation is a form of communication that everybody uses from time to time in order to reach an agreement. As the question below illustrates, good bargaining skills can come in handy whether you’re in the trucking business or just trying to get along in life.
QUESTION: I was recently involved in a discussion with another owner-operator regarding the rate he is receiving from a shipper that we both know. If he is to be believed, I definitely need to work on improving my bargaining skills. Seems I always come out the loser when trying to negotiate with shippers, my bank’s loan officer, or even my wife. Do you have any tips that could help me?
ANSWER: Even if you discover that your friend is stretching the truth about the rate he’s getting, it certainly never hurts to sharpen your negotiating skills.
First, you should stop thinking about negotiations in terms of winning and losing. The best negotiations result in all parties reaching a mutually satisfying agreement. If either party feels like a loser in the bargain, he/she may be less willing to offer total commitment to the deal. It’s possible for all parties to “win,” but it takes some work and lots of practice.
Never enter the negotiations with a defeatist attitude. You may believe the shipper has all the power when it comes to negotiating for a good rate, but you have your own level of power, also. Come to the bargaining table with an aura of self-confidence and the attitude that you’ll be able to reach terms that meet your needs. You should never give the other party the impression that they have all the power. If you do, you’ve weakened your ability to gain ground in the negotiating process.
Prior to the beginning of negotiations, decide what it is that you would like to gain in the deal. Determine your ideal terms as well as your bottom line. Although you may not be able to get everything you want, don’t settle for less than you have decided is necessary to meet your needs. If you agree to terms that leave a bad taste in your mouth, you’ll always feel like the loser in the deal and will be less motivated to follow through.
It is to your advantage to have a number of other options available to you in the event that negotiations are unfavorable. If your back is against the wall without walk-away alternatives, you are at a definite disadvantage right from the start. The fact that you have other options in case you are unable to come to an acceptable agreement will help you negotiate with confidence; however, be careful not to defeat your purpose by coming to the table with a hostile attitude, as nothing is likely to be gained in that kind of climate.
It is important for you to do some research prior to entering the negotiation process. For example, if the company has a standard contract, be sure that you read and understand the terms. Ask for clarification if you don’t understand why the company has taken a specific position on terms that you’d like to see revised or eliminated. Try to gain an awareness of which items are on the company’s non-negotiable list, in order to compare them with your own needs and expectations.
Be prepared to listen as much as you talk. Be aware of body language and voice inflections that can help you determine the meaning beneath the position the other party is presenting. Stay focused on what they are saying instead of thinking about what you are going to say next. Being a good listener may help you to gain a wealth of knowledge and understanding that could give you the edge in the negotiation process before you ever speak a word of your own.
Always ask for what you want, even if you aren’t really confident that you’ll get it. You won’t know for sure what gains you can achieve if you don’t at least ask. Be prepared to provide valid reasons for your request so you can present a convincing case. Once again, it is imperative that you know your bottom line so that you can decide whether denial of your request is a deal-breaker or a concession you are willing to make in exchange for gains in other areas.
If the negotiations become heated, don’t react emotionally. It’s important to stay focused on your goal of reaching an agreement that reflects your best interests. If you get mad and walk away from the negotiations before an agreement is reached, you may be closing the door on opportunities that could advance your interests. Before reacting, take a mental break in order to find the best way to restructure your argument to help you convince the other party of its logical aspects.
For example: Let’s say that the rate the shipper offers you is not enough money to meet your break-even point and allow you some profit. Once you have stated your position, let the shipper know that you are willing to accept an amount that is fair – one that will allow you both to make a reasonable profit.
Then ask the shipper to help you understand how the rate he/she is offering can accomplish this goal. Presenting your position in this manner places the monkey on the shipper’s back by forcing him/her to show how the rate that has been offered fulfills both parties’ need to be profitable. If the shipper is truly negotiating in good faith, he/she will realize the necessity to arrive upon a mutually beneficial agreement. If that can’t happen, at least you’ll know that it’s time to walk away and pursue your other options.
Remember, you won’t always get everything that you want; however, using good negotiation skills will help you to make your best deal, whether it’s buying new equipment for your business or convincing your spouse to shorten up her honey-do list on this trip home. Face it ... she knows you too well, so forget that one!
If you have questions about doing business as an owner-operator and/or an independent trucker, please e-mail them email@example.com or send then to PO Box 1000, Grain Valley, MO 64029. We can’t publish all of your questions in Land Line, but you will receive a response, even if your letter is not published.