In business, you are negotiating all the time, with your customers, suppliers, staff, the bank, and almost everyone else you come across. But how often are you bullied into bad deals or just doing bad deals period?
If you look at a single day, you will be involved in literally hundreds of negotiations, with people who range anywhere from that large customer you have just signed up, to your staff wanting to leave early. Even when you get home you may find yourself locked in a heated negotiation over bedtime with your spouse and kids! Or yourself!
I have put together here some key principles that will help you get better results from your negotiations.
These principles are based on a book called "Start with No" by Jim Camp. This is an invaluable resource which I often refer to as I coach many clients through difficult negotiations they face in running a business. I particularly like his approach because it is not manipulative or deceptive, but is instead based on good honest principles that simply work and get results.
Neediness - don't do it
As soon as you start thinking that you need this deal, you are already on the back foot. Take a step back and think. If you don't get this deal, can you still put food on the table? Will your business still survive? Are there other options, other customers, other deals if this one doesn't come off? In nearly all cases, the answer will be Yes. You don't need this deal; it would be nice to have it, but you don't neeeeeeed it.
Once you realise this, it's much easier to make better decisions, and you don't feel or look needy when negotiating. Think back to the last time you dealt with a sales rep that appeared a little desperate, a little too needy. If you are like me, you were probably thinking why is guy/girl so desperate to get this sale? What is wrong with this deal?
So take the pressure off yourself, and stop being needy.
Start with "No"
This sounds strange at first but it makes sense. If you have a "Yes", you need to check if it's real. An early "Yes" can be dangerous because it can easily be changed to a "No" - it's not based on much.
If you have a "Maybe", this must to be turned into a "Yes" or "No". Don't be caught in "Maybe"-land. It sucks because if you are not careful, you start making plans on the "Maybe"s; you start counting those sales you don't have, planning cashflow around them... thinking about that new house if the deal comes off. Then before you know it you are in trouble and have become needy.
This leaves "No", which is often a good place to start. Everyone involved is forced to define exactly what they do and don't want. Once you have a "No", you can explore the real issues to see if there really is a deal there or not and if there is not, no worries, start spending your time on finding better prospects or deals, rather than wasting time in negotiations that are going nowhere.
Mission and purpose
Get into the world of your adversary (the other party), and find out what they are looking for. Then create a vision or mission and purpose they can buy into. Find out what they need and then start talking with them about how they can achieve this with your help.
Once you understand your customer and what they really want, and have the ability to provide this, then you are well on the way to a deal that is going to stick.
Stop trying to control the outcome
At the end of the day, you can't make anyone do anything unless they have a gun to their head. And guess what? Once that gun is taken away, I doubt they will stick to their agreement (would you?) After all, they never had a choice really did they, so they don't feel any compulsion to honour the agreement.
So stop trying to control the outcome. They ultimately have to decide, so give them the space to do that. Instead, get alongside them and help them make the best decision for them. Maybe it's your product, maybe it's not. Take this approach and you will find that the barriers come down, you will be more trustworthy in the other parties eyes, and with the pressure off, you will get much better results.
Blank slate
Don't assume you know everything or anything, because you are probably wrong and will blow the deal. Ask questions. Be a detective, and look for clues that will help you give the best solution for your customer.
Have an agenda
Know what you want from the negotiation, and then stay the course. This is about deciding what you want to achieve from the particular meeting. It might be a small step like "I want the customer to understand the extra benefits my product has over other competitors in the market" or "To fully understand what the customer needs or is worried about". If you have achieved this, it will bring you closer to a good result.
But be very clear on what your results should be, and be prepared to walk away if you can't achieve them. I know plenty of subbies in the building industry that are taking some terrible deals with impossibly low margins because they had not decided on their own margins, and at what point they should walk away.
Remember if you don't have an agenda, the person across the table most likely will. And their agenda, you may not like.
Deal with the decision makers
Have you spent hours negotiating a deal, only to find after you have made all the compromises, that the person you were dealing with did not have the authority to make the decision anyway?
Don't be fooled - this is a common tactic with larger companies. They will get all the compromises from you early on, only to then advise that the decision will be made by their boss. So check first and make sure the person you are dealing with has the authority to make a decision, before spilling your beans and then be asked to spill some more when your jar is already empty.
We have only just scratched the surface here, but this will get you started to win in your negotiations as a business owner. There are more principles in the book, but I have picked the ones I have found particularly effective.
These principles are simple enough, but to master them takes a lifetime.
Action Point:
1) Pick one of these principles per week and start using it in your negotiations.
If you look at a single day, you will be involved in literally hundreds of negotiations, with people who range anywhere from that large customer you have just signed up, to your staff wanting to leave early. Even when you get home you may find yourself locked in a heated negotiation over bedtime with your spouse and kids! Or yourself!
I have put together here some key principles that will help you get better results from your negotiations.
These principles are based on a book called "Start with No" by Jim Camp. This is an invaluable resource which I often refer to as I coach many clients through difficult negotiations they face in running a business. I particularly like his approach because it is not manipulative or deceptive, but is instead based on good honest principles that simply work and get results.
Neediness - don't do it
As soon as you start thinking that you need this deal, you are already on the back foot. Take a step back and think. If you don't get this deal, can you still put food on the table? Will your business still survive? Are there other options, other customers, other deals if this one doesn't come off? In nearly all cases, the answer will be Yes. You don't need this deal; it would be nice to have it, but you don't neeeeeeed it.
Once you realise this, it's much easier to make better decisions, and you don't feel or look needy when negotiating. Think back to the last time you dealt with a sales rep that appeared a little desperate, a little too needy. If you are like me, you were probably thinking why is guy/girl so desperate to get this sale? What is wrong with this deal?
So take the pressure off yourself, and stop being needy.
Start with "No"
This sounds strange at first but it makes sense. If you have a "Yes", you need to check if it's real. An early "Yes" can be dangerous because it can easily be changed to a "No" - it's not based on much.
If you have a "Maybe", this must to be turned into a "Yes" or "No". Don't be caught in "Maybe"-land. It sucks because if you are not careful, you start making plans on the "Maybe"s; you start counting those sales you don't have, planning cashflow around them... thinking about that new house if the deal comes off. Then before you know it you are in trouble and have become needy.
This leaves "No", which is often a good place to start. Everyone involved is forced to define exactly what they do and don't want. Once you have a "No", you can explore the real issues to see if there really is a deal there or not and if there is not, no worries, start spending your time on finding better prospects or deals, rather than wasting time in negotiations that are going nowhere.
Mission and purpose
Get into the world of your adversary (the other party), and find out what they are looking for. Then create a vision or mission and purpose they can buy into. Find out what they need and then start talking with them about how they can achieve this with your help.
Once you understand your customer and what they really want, and have the ability to provide this, then you are well on the way to a deal that is going to stick.
Stop trying to control the outcome
At the end of the day, you can't make anyone do anything unless they have a gun to their head. And guess what? Once that gun is taken away, I doubt they will stick to their agreement (would you?) After all, they never had a choice really did they, so they don't feel any compulsion to honour the agreement.
So stop trying to control the outcome. They ultimately have to decide, so give them the space to do that. Instead, get alongside them and help them make the best decision for them. Maybe it's your product, maybe it's not. Take this approach and you will find that the barriers come down, you will be more trustworthy in the other parties eyes, and with the pressure off, you will get much better results.
Blank slate
Don't assume you know everything or anything, because you are probably wrong and will blow the deal. Ask questions. Be a detective, and look for clues that will help you give the best solution for your customer.
Have an agenda
Know what you want from the negotiation, and then stay the course. This is about deciding what you want to achieve from the particular meeting. It might be a small step like "I want the customer to understand the extra benefits my product has over other competitors in the market" or "To fully understand what the customer needs or is worried about". If you have achieved this, it will bring you closer to a good result.
But be very clear on what your results should be, and be prepared to walk away if you can't achieve them. I know plenty of subbies in the building industry that are taking some terrible deals with impossibly low margins because they had not decided on their own margins, and at what point they should walk away.
Remember if you don't have an agenda, the person across the table most likely will. And their agenda, you may not like.
Deal with the decision makers
Have you spent hours negotiating a deal, only to find after you have made all the compromises, that the person you were dealing with did not have the authority to make the decision anyway?
Don't be fooled - this is a common tactic with larger companies. They will get all the compromises from you early on, only to then advise that the decision will be made by their boss. So check first and make sure the person you are dealing with has the authority to make a decision, before spilling your beans and then be asked to spill some more when your jar is already empty.
We have only just scratched the surface here, but this will get you started to win in your negotiations as a business owner. There are more principles in the book, but I have picked the ones I have found particularly effective.
These principles are simple enough, but to master them takes a lifetime.
Action Point:
1) Pick one of these principles per week and start using it in your negotiations.
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