Small Talk – yes or no?

15. February 2024By Anita BleikerIn Negotiation

What negotiations involve and when they begin

Recently, I was asked about the best way to initiate negotiations. Should one engage in small talk, or is it better to abstain? This question motivated me to write today’s blog. While I understand what the person wanted to know, I believe negotiations commence long before sitting at the negotiating table.

Any action related to a potential business deal is already part of the negotiations. Depending on how the buyer and seller behave in the initial conversation, interpretations about interest can be drawn, significantly influencing the counterpart’s willingness to negotiate.

An example from my experience:
Last December, we received a request from a client asking if we could negotiate a contract for him by the end of the year. As it was already a week before Christmas, we informed him that this seemed unrealistic. He mentioned that there was not much left to do, he already received the draft of the contract, and his management just wanted us to negotiate the best terms. We were somewhat surprised that a contract draft was already present, even though the client emphasized that nothing had been negotiated yet. What he did not understand at that moment was that his initial call, site visits, and ultimately ordering the contract draft were already part of the negotiations. The contract itself is merely a legally binding document that formalizes the previously negotiated conditions in writing.

In our view, negotiations on contract terms were technically already concluded. However, the client saw it differently and informed us that the management needed to save at least an additional CHF 250,000. After much back and forth, we agreed and reviewed the contract draft. It turned out there was hardly any room for further negotiation, as the other party had already fully utilized it, and our client had no additional budget. Unfortunately, the deal fell through because the client did not get management approval. Conclusion: Negotiations began long before the start of our mandate, and all involved parties could have saved much time by agreeing on well-prepared negotiations and a clear negotiation strategy.

Returning to the question of how negotiations should be initiated and whether small talk is appropriate, I recommend conducting negotiations at a physical negotiation table, especially in complex negotiations or when little is known about the counterpart. This allows for developing a sense of the atmosphere on the way from the reception to the negotiation room or subtly hinting at or querying something informally. Whether and to what extent one wants to reveal their cards depend on the specific situation.

Small talk is essential for building and maintaining relationships and is highly recommended. This is precisely what my next blog will focus on. Stay tuned!