Entrepreneurs negotiate almost every day — prices with customers, terms with vendors, contracts with partners. Dr. Yogesh Pawar breaks down seven practical skills to help you prepare, listen, create value and close deals with clarity instead of pressure.
Dr. Yogesh Pawar
Founder, School of Inspirational Leadership
Fear of losing the deal is what makes entrepreneurs give the deal away.
Entrepreneurs negotiate almost every day — prices with customers, payment terms with vendors, responsibilities with employees, contracts with partners and commercial conditions with investors or service providers. Some negotiations are formal, across a meeting table; others happen during a short phone call, an email exchange or a routine discussion with a team member.
Despite its importance, negotiation can make many business owners uncomfortable. They may worry about losing the opportunity, damaging the relationship, appearing unreasonable or being unable to respond when the other party applies pressure. This fear can cause entrepreneurs to accept unfavourable terms, offer discounts too quickly, or make commitments that later become difficult to deliver.
The SIL video "Art of Negotiation | Dr. Yogesh Pawar" encourages business leaders not to negotiate out of fear, and not to be afraid of negotiation itself. Effective negotiation is not about defeating the other person — it is about understanding interests, communicating value, evaluating alternatives, and reaching an agreement both parties can realistically honour.
In this masterclass
Prefer watching? Jump to the full SIL masterclass session below, or keep reading for the detailed breakdown of all seven skills.
What is business negotiation?
A structured discussion between two or more parties seeking an agreement. Negotiation is not limited to price — a commercial agreement can include volume, duration, quality, service levels, warranties, payment schedules, delivery responsibilities and future business opportunities.
Why it matters for entrepreneurs
An entrepreneur's negotiation ability can directly affect revenue, profit margins, cash flow, customer relationships, vendor performance, business risk and long-term growth. A weak negotiation may win the sale while creating poor payment terms or unrealistic obligations.
Skill 1 of 7
Successful negotiation begins before the meeting. Entrepreneurs sometimes enter discussions relying on experience, confidence or product knowledge — but even a skilled negotiator can make poor decisions without sufficient preparation.
The Program on Negotiation at Harvard Law School identifies inadequate preparation as a common and costly negotiating mistake, recommending that objectives, interests, alternatives and limits be clarified beforehand.
Define three levels of outcome
Ideal outcome (the best realistic result) → Acceptable outcome (meets essential requirements) → Walk-away point (beyond which the deal becomes unsuitable).
Understand your BATNA (Best Alternative to a Negotiated Agreement)
Before negotiating, understand:
Skill 2 of 7
A negotiating position is what a person says they want. An interest is the underlying reason why they want it. If the entrepreneur responds only to the stated position, the conversation may remain limited to price.
For example, a customer saying "we need a 15% discount" (the position) may really be facing a limited budget, a lower competitor quotation, or uncertainty about expected value (the interest) — understanding it opens up other solutions.
Confirm your understanding
"If I have understood correctly, your main concern is not only the initial price — you also need confidence the implementation will be completed before next quarter. Is that correct?"
Ask thoughtful questions
If the interest is understood, consider:
Skill 3 of 7
Customers may focus on price when the value of the solution isn't sufficiently clear. Before defending the price, understand whether the other party recognises the result your product or service can create.
Avoid presenting every feature — focus on what connects directly to the customer's requirement. "Our platform includes automated dashboards" says less than "Your team spends hours preparing reports manually; the dashboard removes that work."
Quantify value where possible
If the solution saves time, say how much. If it reduces cost, estimate the saving. Avoid exaggerated or unsupported claims — value communication should stay credible and realistic.
Before offering a discount, ask:
Everything covered so far — and what's ahead — comes from this SIL Masterclass session. Watch it in full, or continue reading below.
Skill 4 of 7
Negotiations become difficult when both parties defend only one position — the customer wants a lower price, the business wants to protect its margin, and neither side explores other variables.
A more productive approach generates several possible options across multiple variables, since one term may matter far more to one party than the other.
Use conditional proposals
"If you can confirm the annual volume, we can review the unit price." "If the payment period is extended, the commercial terms will need to be adjusted."
Before conceding, ask
Negotiable variables can include:
Skill 5 of 7
Negotiations can become emotional when the outcome affects revenue, reputation, business continuity or an important relationship — fear of losing the customer or appearing unreasonable can lead to hasty discounts or unrealistic commitments.
The video's central message is especially relevant here: business leaders should not negotiate out of fear, but they should also not fear negotiation itself.
Remain calm under pressure or an ultimatum
Pause before responding — use phrases like:
Everything covered so far — and what's ahead — comes from this SIL Masterclass session. Watch it in full, or continue reading below.
Skill 6 of 7
A good business negotiation considers both the immediate agreement and the future relationship — but protecting a relationship does not mean accepting every condition. An unsustainable agreement may eventually damage the relationship because the business cannot fulfil what it promised.
Be transparent about limitations: "We cannot support a 90-day payment period under the current price because it would significantly affect working capital. We can explore either a shorter payment period or revised commercial terms." This is more constructive than simply saying no.
Know when to walk away
When the agreement creates unacceptable financial risk, the other party expects unethical conduct, or the proposed agreement is worse than the available alternative.
Before accepting, review:
Skill 7 of 7
A successful discussion can still create future problems if the final agreement is unclear. Before concluding, confirm what has been agreed, what remains open, pricing, scope, timelines, responsibilities and next steps.
Do not rely entirely on verbal understanding — and before making a final commitment, ensure the relevant internal teams (finance, operations, legal) understand and can support the agreement.
Summarise verbally before ending the meeting
"To confirm, we have agreed on the revised scope, a three-stage payment plan and implementation beginning next month. Your team will share the contract draft by Friday."
Document the agreement through:
Use this framework before any important negotiation — it helps entrepreneurs enter with clarity rather than depending only on confidence or improvisation.
Objective
What do we want to achieve?
Interests
Why is this outcome important?
Priorities
Which terms matter most?
Flexibility
Where can we adjust?
Limits
Which conditions are unacceptable?
Alternatives
What will we do if no agreement is reached?
Other Party
What are their likely interests and constraints?
Value
What meaningful result are we offering?
Options
Which alternative structures can we propose?
Authority
Who can approve changes?
Closure
How will the agreement be documented?
Entering Without Preparation
Without clear objectives, alternatives and limits, entrepreneurs may make unnecessary concessions.
Focusing Only on Price
Terms such as scope, payment, volume, delivery and service can be equally important.
Speaking More Than Listening
The other party's questions and objections provide useful information about their priorities.
Offering Discounts Too Quickly
The customer's actual concern may relate to value, risk, timing or payment conditions.
Negotiating From Fear
Fear of losing the opportunity can lead to commercially unsuitable commitments.
Making One-Sided Concessions
A concession should normally be connected to a meaningful exchange.
Making Decisions Without Authority
Confirm which terms can be approved before the discussion begins.
Accepting Unclear Commitments
Every important term should be defined and documented.
Ignoring Implementation Capability
Do not agree to deadlines or services that the organisation cannot deliver reliably.
Treating Disagreement as Conflict
Professional disagreement is a natural part of negotiation.
"Your Price Is Too High"
Avoid defending the price immediately.
Then reconnect the price with the value and explore suitable options.
The Other Party Demands an Immediate Answer
Respond with a considered pause, not an instant yes.
A reasonable business decision does not always need to be made instantly.
The Customer Mentions a Competitor
Understand the comparison before reacting.
Avoid criticising competitors without verified information.
Negotiations Reach a Deadlock
Return to underlying interests.
Sometimes a temporary pause is more useful than continuing an unproductive discussion.
Before the Negotiation
During the Negotiation
After the Negotiation
For an MSME, one poor agreement can have a significant impact. An unsuitable payment period can create working-capital pressure. An unrealistic delivery commitment can damage customer trust. A poorly structured vendor agreement can increase cost and operational risk.
MSME entrepreneurs often negotiate personally with important customers, suppliers and partners — their ability to prepare, communicate value and protect commercial interests can influence the entire business. The objective should not be to win at the other party's expense, but to reach an agreement that is commercially practical, responsibly structured and capable of being implemented successfully.
Protect margins
Improve cash flow
Build stronger customer relationships
Secure reliable vendors
Reduce business risk
Create better partnerships
Manage employee expectations
Support sustainable growth
A confident negotiator is not the person who speaks the loudest or refuses every compromise.
Negotiation is not a battle of personalities. It is a business process that requires preparation, listening, clear communication, thoughtful options and disciplined decision-making. A confident negotiator understands the business goals, knows the available alternatives, listens carefully, and makes decisions based on value rather than pressure.
The SIL video recognises that negotiation can be difficult, and its central message encourages entrepreneurs never to negotiate out of fear while also never becoming afraid to negotiate. When negotiation is approached with preparation and mutual respect, it can create stronger agreements and more sustainable business relationships.
Entrepreneurs can improve their negotiation outcomes by following seven practices:
Business negotiation is a structured discussion in which two or more parties attempt to reach agreement on commercial terms, responsibilities, expectations or other matters of shared interest.
Entrepreneurs should define their objectives, acceptable outcome, walk-away point, alternatives, negotiable terms and the other party's likely interests before beginning the discussion.
BATNA means Best Alternative to a Negotiated Agreement. It is the course of action a party will take if an acceptable agreement cannot be reached.
Entrepreneurs should first understand why the discount is being requested, communicate the value of the offering and explore variables such as scope, volume, payment terms and contract duration.
A win-win negotiation creates an agreement that addresses important interests of both parties and can be implemented in a commercially and operationally sustainable manner.
Entrepreneurs can negotiate with greater confidence by preparing thoroughly, understanding their alternatives, defining limits, asking questions and avoiding immediate decisions under pressure.
A business should consider walking away when the agreement creates unacceptable financial, ethical, operational or legal risks, or when the proposed terms are worse than the available alternative.
Written documentation confirms the commercial terms, responsibilities, timelines and next actions, reducing the risk of future misunderstanding or disagreement.
SIL works with entrepreneurs and growing businesses to develop leadership capabilities, strengthen decision-making and build practical systems for sustainable growth.