BATNA

BATNA (Best Alternative to a Negotiated Agreement) is what you’ll do if this negotiation doesn’t produce a deal. It is the source of negotiating power: a strong BATNA means you can walk away; a weak BATNA means you can’t.

Example: You’re negotiating with your primary food distributor for a 5% price reduction. Your BATNA is the quote you received from a competing distributor — $3.15/lb for chicken versus the current $3.45. If the negotiation fails, you switch suppliers. The competing quote makes the BATNA strong: you have a real, viable alternative.

If you have no competing quote, no backup supplier, and no ability to source elsewhere, your BATNA is accepting the current price. That’s a weak BATNA — the supplier knows you have no alternative, and your request for a discount carries no weight.

Strengthening your BATNA

Before any negotiation:

1. Identify your alternatives. What will you actually do if this deal falls through? Be specific.
2. Develop the best alternative. Get competing quotes. Talk to other landlords, suppliers, or lenders. The act of developing alternatives often produces better options than you expected.
3. Know the other party’s BATNA. If a landlord has three vacant units and you’re the only prospect, their BATNA (continued vacancy) is weak — even if yours is also imperfect.

BATNA applies to every business negotiation: commercial leases, supplier relationships, financing terms, employee salary discussions, and partnership agreements. The principle is always the same: know your alternative before you sit down.