CFOs, especially small business CFOs, wear multiple hats, including one often overlooked and underappreciated — that of the negotiator. We often think about negotiations only in the context of infrequent, high-impact situations like negotiating an M&A deal, collective bargaining agreement or a multi-million-dollar contract.

In fact, we engage in negotiations daily, whether establishing strategic goals, objectives and budgets with cross-functional partners, defining service level, payment and other terms with new customers and vendors, determining the appropriate offer for a new hire or simply aligning on today’s priorities with our team. By problem-solving together, parties engaged in negotiation can improve the current status quo.

Say, for example, you have a multi-year building lease with favorable pricing, but you discontinued all operations in the facility. If you do nothing, you will be paying rent for an empty building until the lease expires. Or, knowing the market is hot with other tenants in need of such a building, you could negotiate with the landlord whereby the landlord terminates your lease early so they can then negotiate a new lease with another tenant at a higher (i.e., market) rate. In short, you can negotiate a win/win agreement.

Tips on polishing your negotiation skills

The following are 10 tips on being a more effective negotiator.

1. Know you’re negotiating. Collective bargaining, M&A, multi-year service agreement and other such discussions are clearly negotiations. The negotiation aspect of aligning on budget expectations, setting priorities or addressing team conflict may be less apparent. The first step to an effective negotiation, then, is knowing you are in one.  
2. Do your homework. When I was part of Campbell’s management collective bargaining team, we started preparing at least six months before sitting down at the table with the union. We clarified and prioritized our goals, brainstormed what the union was likely to ask for and quantified economic impact where applicable. We discussed the role of each member of the negotiations team. We strategized how to introduce and justify each of our asks. We role-played the discussions. And, knowing such negotiations never go as planned, we created multiple scenarios for key proposals. The lesson? Prepare, prepare, prepare!    
3. Know your value. Years ago, before buying my first new car, and before ChatGPT,  someone gave me an article entitled “Playing the dealer’s game.” One suggestion was to call multiple car dealerships, tell them the specific car and features wanted (using the dealer’s lingo as provided in the article), and ask them for their price. Once you knew the value of what you wanted, you could then negotiate in confidence with your preferred (e.g., local) dealer. The same principal holds if you are negotiating a lease, selling used equipment, or hiring a new member of the team.     
4. Build relationships. Have you noticed that the experience of negotiating with someone you know is totally different than negotiating with a stranger? I firmly believe you should build strong relationships with current and potential business partners over time. By doing so, you build trust, and you gain insight into their goals, priorities and style. During a recent, critically important negotiation, we spent double the time talking about mutual interests than the negotiation itself because we quickly came to a win/win agreement. Relationships matter.
5. Listen. Leaders are frequently advised to listen more than they speak, great advice if you want a successful negotiation. If you are negotiating a multi-faceted deal, for example, knowing the other party’s “must have” vs. their “nice to haves” is valuable insight, especially if their “must have” is an easy give for you. By listening to what is spoken, and what goes unsaid, you are more likely to gain such insight.    
6. Tell your story. Small businesses are often at a disadvantage when negotiating with their large customers and vendors. One trend, for example, is for large customers to request 45-day, 60-day, 90-day or even 120+ day payments terms. You could acquiesce. Or you could tell your story, explaining that your company is not a bank, that cash is more than a metric, enabling you to pay your employees and vendors timely, and that you respectfully need to say no to the request for extended (i.e., unreasonable) payment terms.   
7. Remember it’s a negotiation. You are under significant pressure to quickly sell obsolete equipment from a discontinued operation. You receive an offer that, relative to expectations, is reasonable. You could take it, no questions asked, and be satisfied. Or you could discuss the offer, resulting in a 30% increase to the initial bid and clarity that the buyer will pay for the disassembly, packing, and shipping of the equipment. Negotiations are, well, negotiations, so counteroffers are part of the process.     
8. Know your last, best and final. In any negotiation, while you may be aggressive in your initial proposal, you should have realistic expectations, and you should know in advance your last/best/final terms. As Kenny Rogers says in The Gambler, “You gotta know when to hold up, know when to fold up, know when to walk away and know when to run.”   
9. Strive for win/win. In principled negotiations, the interests of both parties can be served by finding mutually beneficial outcomes through bargaining, identifying and communicating each party’s motivations, interests and needs, separating emotions from the issues, and using objective criteria as a baseline. Such principled negotiations enable win/win agreements.     
10. Conduct a post-mortem. After any significant negotiation, pull the team together to assess what worked well, what did not, and what you would do differently next time. Conducting a post-mortem enables your and your team’s continuous improvement.