Negotiation is a part of entrepreneurship, whether you’re working with a supplier, employee, wholesaler, investor, or any other person with whom you’re making a deal. Often, your product and proof of concept aren’t enough on their own to help you secure the deals you want to make — and in those cases, some strategy can help you make favorable compromises that can then help you achieve your entrepreneurial goals.
But know going in that you may be spoiling for a fight. Unconscious and structural bias can make it harder for Black women entrepreneurs, in particular, to negotiate. After all, research on salary negotiations shows that Black women receive lower pay than their White male peers, in spite of asking for the same amount or more. And although Black women are the fastest growing demographic of entrepreneurs, they receive less than 1 percent of all venture capital.
So take a lesson from those who’ve managed to overcome those challenges, structural or otherwise. Here are five tips from two Black women entrepreneurs who’ve succeeded in negotiating everything from retail partner pay agreements to supplier contracts.
Do your homework.
It may sound obvious, but before any negotiation, it’s crucial to have a strong outline of what you hope to gain from a deal. “You have to look at your numbers and see where you need to be in terms of your margins,” says Stephanie Summerson Hall, founder of Holly Hill, South Carolina-based glassware brand Estelle Colored Glass. You should also take non-monetary factors, like a product’s unique value proposition, into consideration. Basically, your sales pitch needs to be refined.
You should also develop a clear understanding of what you’re willing to make concessions on, adds Trinity Mouzon Wofford, co-founder of Chatham, New York-based wellness brand Golde. “That way, you’re not calculating those things on the spot.”
Be prepared for compromise.
Before she became a full-time entrepreneur, Hall was a lawyer for a decade, so she’s long approached the negotiation process with confidence. “I always start by being clear on my intentions and making a firm offer,” she says. “Part of the chess game is clearly stating what is ideal to you, but [also] knowing that you’ll meet somewhere in the middle, as you’ll likely have a counter offer.”
Getting it right the first time is especially critical if you’re negotiating with someone — like a vendor or a wholesale partner — that you’ll continually work with. As Mouzon Wofford points out, it can be difficult to considerably change your terms in future deals: “Oftentimes, once you sign those documents, it’s hard to go back and say, ‘Actually, I want this instead.'”
Identify your counterpart’s limits.
Compromise is a part of any deal, but it’s helpful to know where the person you’re negotiating with can be flexible and where they can’t. This is especially pertinent for deals like wholesale agreements, Mouzon Wofford says. She recommends reaching out to fellow entrepreneurs who can give you a sense of a retail partner’s typical terms, based on their experience. That way, she adds, “you don’t end up wasting time playing hardball on something they’re not comfortable moving on.”
Mouzon Wofford, for her part, has found flexibility in payment terms with retail partners: While many typically offer net-90-day payments, she successfully negotiated for net-30-day payments, which has helped Golde increase its cash flow.
Offer your loyalty.
It’s easier to make favorable deals when you’ve demonstrated success. Negotiating when you’re just starting out can be more challenging — but Hall says that the promise of loyalty can help. Before she even made a website for Estelle Colored Glass, Hall approached a vendor of luxury boxes to supply her glassware’s packaging. The upstate New York-based vendor had a minimum order number that far surpassed Hall’s needs and budget, so she made a proposal. “I asked, very confidently, ‘Can you please produce a small quantity of boxes for us?'” she says. “And in exchange, I offered loyalty and a long-term relationship.” The vendor agreed and remains Estelle Colored Glass’s exclusive packaging supplier.
Know when to walk away.
Ultimately, both Mouzon Wofford and Hall say that a negotiation should result in a win-win situation — and when it doesn’t, that’s a sign that the deal isn’t a fit. Estelle Colored Glass makes about 30 percent of its sales through retail partners, Hall says, but she’s careful to select partners that are viable for her company, and she treats them right. “One of the things we do is make sure we don’t crowd the market with our products,” she says. “We make sure competing stockists aren’t next door to each other.” Their survival is vital for her company’s survival, so she prioritizes their longevity, which can involve saying no to would-be retail partners.
If a deal doesn’t set your company up for success, that’s also a no-go, Mouzon Wofford says. “If you know that you need a certain margin at that retailer to be profitable, and you know that that retailer absolutely cannot hit that margin, then you have to adjust your pricing or walk,” she says. “It doesn’t make sense for you to do something that isn’t scalable.”