Negotiation Is Not About Price: Why Entrepreneurs Must Learn to Trade Smart, Not Loud;

Entrepreneurs often walk into negotiation rooms thinking it’s a battle of price. They come prepared to defend their figures, cut margins, or haggle aggressively in the hope of closing the deal. But the truth is, price is only one piece of the puzzle, and often, it’s not even the most important one.

Research shows that over 70% of business partnerships fail within the first five years not because of pricing disputes, but because of poorly structured agreements, unbalanced risks, and rigid terms. What this means is that entrepreneurs are not losing because they charged “too much” or paid “too little,” but because they negotiated badly around the framework of the deal.

Take a simple example. A small manufacturer negotiating with a raw material supplier. Supplier A offers them a lower price, but demands full payment up front. Supplier B offers a slightly higher price but allows 90-day credit terms. Which one is better? If the entrepreneur picks the cheaper option without thinking of cash flow, they may starve their operations, fail to pay staff, and even default on other obligations. The deal was “cheap,” but it was poisonous.

Cash flow is the lifeblood of small and medium-sized enterprises (SMEs). According to a 2023 Central Bank of Kenya survey, 46% of SME failures were attributed to cash flow mismanagement, with delayed receivables and inflexible supplier terms being key triggers. This underlines why entrepreneurs should never negotiate on price alone, but on the terms that allow them to keep money moving.

Risk-sharing is another overlooked element in negotiation. Imagine a contractor who signs a project at a low price to beat the competition but takes on all the risks of delays, inflation, or unforeseen disruptions. A single delay in cement delivery, or a currency fluctuation, could wipe out their entire profit margin. A better negotiator would push for clauses that account for inflation, delivery delays, or shared penalties. That’s what separates survivors from casualties in business.

Globally, businesses that negotiate terms wisely tend to last longer. In the United States, the Harvard Program on Negotiation notes that firms that prioritize structuring deals around long-term sustainability are 31% more profitable over 10 years compared to those focused primarily on lowering upfront costs.

Closer home, Kenya’s own telco sector provides an illustrative example. Safaricom doesn’t just negotiate on pricing when partnering with vendors; it negotiates service-level agreements (SLAs), revenue-sharing models, and technology transfer terms. That’s why it has managed to remain profitable even as competition in the sector stiffens.

Another mistake entrepreneurs make is confusing being loud with being effective. Shouting, threatening to walk away, or dragging negotiations into endless arguments does not add value. Smart negotiators know that it’s not about noise but about structuring the deal intelligently. They know when to give up something minor in exchange for something that has a bigger impact on their business sustainability.

Consider a retailer negotiating with a mall owner. The rent may be fixed, but can the entrepreneur negotiate for a rent-free fit-out period? Can they push for a revenue-share model instead of flat rent during tough months? Can they secure better parking allocations for customers? These are not “price” issues, yet they directly determine whether the business will survive in that space.

There is also the matter of long-term vision. Entrepreneurs who focus on immediate price savings often miss growth opportunities. For instance, a tech startup may negotiate a cheap licensing deal but fail to secure clauses that allow scaling without extra costs. Later, as they grow, they are forced to renegotiate from a weaker position or pay through the nose. Strategic entrepreneurs negotiate with the future in mind, not just the present.

Let’s look at some numbers. According to the World Bank’s 2024 Doing Business Report, SMEs in sub-Saharan Africa lose up to 25% of potential revenue growth due to poorly negotiated supplier and customer contracts. This shows that negotiation mistakes are not just theoretical—they translate into billions in lost opportunities across the region.

The irony is that many entrepreneurs spend years mastering their craft, improving their products, or chasing customers, but they neglect to master the art of negotiation. And yet, every shilling earned or lost in business is often determined not on the shop floor, but at the negotiation table.

Negotiation should therefore be treated as a core entrepreneurial skill, just like sales, marketing, or product development. It is not about who can argue louder, but who can align the structure of the deal with the long-term health of their business.

In a country like Kenya, where SMEs contribute over 40% of GDP and employ 7.4 million people, entrepreneurs cannot afford to keep negotiating blindly. Every time they agree to unfavorable terms, they weaken not only their businesses but the entire SME ecosystem.

The government, too, has a role to play. Policies that promote fair contracting, timely payments by large corporations to SMEs, and transparency in supply chains can help entrepreneurs negotiate from a position of strength. Without this, SMEs will always be forced into desperate price wars that only serve to weaken them further.

At the end of the day, the entrepreneur who survives is not the one who sells the cheapest, nor the one who shouts the loudest. It is the one who structures their deals wisely, manages risk intelligently, and protects their cash flow fiercely.

Price matters, yes—but it is never everything. Terms, structure, and risk are where real wealth is made or destroyed. Entrepreneurs must never forget that.

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