Small Business Advice - How to Negotiate

Legal Tips with Cliff Ennico Hi, I’m Cliff Ennico Legal Editor of sbtv.com with some negotiating tips for successful entrepreneurs. Whenever you’re in business for yourself, I always feel that there are three skills you have to master, if you’re serious about being successful. First of all you have to learn how to sell, I think virtually all successful small business owners are good sales people. Secondly, you need to learn the rules of accounting. If you don’t know the numbers that your business is fitting at you each month. You really don’t know what’s going on in your business. All businesses reduce themselves to numbers at some point. And you have to learn that language and learn the stories, how to interpret the stories that those numbers are telling you. But the third and probably the most critical skill, that you need to run a successful business is negotiating. Negotiating is critical to small business success. When you and your own business you negotiate with everyone that you come into contact with. Your costumers, your suppliers, the government, your employees, your partners everything that you do is the results of a negotiation. People ask me, what’s the right price to pay for something or right price for anything. You know the fair market value of anything is what a willing buyer and a willing seller. Are willing to negotiate at a given time there is no standard definition of fair market value for any type of good or commodity that I am aware of. So how do you go about negotiating? Negotiating scares a lot of people because it seems confrontational. But it isn’t, let’s spell some miss of negotiating right now. First of all, negotiating is not a search for truth, justice in the American way. It is not a search for perfect deal. The ideal deal it is not that at all, it’s also not a problem brawl either. Although to listen to some intense negotiation, it might sound just like two people are really fighting. But they’re really not, but they’re just in to the details of negotiation. What are negotiation folks? Very simple, it’s a game. And a very specific game in fact it’s a game of poker. A good poker player in my experience is almost always good negotiators and vice versa. Why? Well most of us know that if you have played poker before, it is a very simple game. A dealer deals a bunch of cards and you’re goal is to try to build the strongest hand possible. They are 35 different hands and they out rank each other, pair deuces is the lowest and the royal flush the ten, jack, queen, king and ace of the same suit is the highest. It is almost the statistical impossibility to get a royal flush in a poker game. And then they are a lot of hands in between, your idea is to get the strongest hand you can at the end of the game. Everybody lays down their cards and the person with the highest hand wins. Very simple, now that’s the world of poker though. There would not be poker channels on cable television, because while is this is going on the players are trying to psyche each other out. And they’re trying to persuade the other players either that their hand is stronger. Or that the other hand is weaker, and your skill in doing this determines who wins the poker game and who doesn’t. I’ve seen people win poker games with only a pair of deuces which is the lowest hand that you can possibly get. I’ve also seen players with very strong hands lose the pot. Because they folded prematurely to someone who has a lesser hand and was able to psyche him that thinking that their hand is stronger than the actually was. Good poker players pay make good negotiators. If you want to learn how to negotiate successfully, get on a plane go to Las Vegas and spend a week playing poker. You might be able to put some dust to that but don’t poke me on that. The IRS might not buy that completely but it’s a good way to build and a good way to learn the art of negotiation. Get over your fear of negotiating, so what are some tips for successful negotiation? Number one and probably the most important rule of any negotiation is never ever show the other side that you really want whatever it is you’re negotiating. In any negotiation the person who loses the negotiation, the person who does all the giving up is the person who needs to deal most. If you really want something and you show the other side that you are really desperate to have that something? That person is going to see that you’ll buy it just about at any price. And they will get their backup with that point; they won’t negotiate fairly with you. They’ll start finding ways to ignore you so that you end up paying their price. They’ll make you come to them; my mom who is a free market queen puts it beautifully. She says she can never ever get the bargain on something you really want. Whenever you are on a negotiation, you always have to send the signal that you can take it or leave it. You’re interested what the other person has but you’re willing to leave without it if you don’t get the deal that you really want. You all know the saying that somebody has a poker face? We’ll this is what it means; never ever let the other side see you’re true emotion about a deal, because almost always they’ll find a way to take advantage of it. The second key rule of negotiation is never ever make a detrudes concession. Never give up something without getting something in return. And this should be obvious, a lot of people so this on negotiation. They begin like they conceding something, well I normally sell this for $50.00, but you know I will let you have it for $40.00. Now what I’m thinking if I’m the other side? I'm might thinking this person is nice, this person gentleman, this person is anxious to get rid of it. What I’m thinking is this person is in a weak position; this person is desperate to unload the same whatever it is. If I played my cards like I’ll get it a lot of a lot less than that $40.00. If I played my cards right, most people when they hear you conceding something, they see that as an invitation to do better, they don’t see it as you’re being fair or honest or whatever. So never ever make a concession in a negotiation without getting something in return. Last but not least, always remember when to stop negotiation if you’re if you’re negotiating. Whenever you are in a negotiation time is your enemy, the more time that you spend at the negotiating table. The more likely it will be that someone will come along and offer the other side a better deal. Or the other side will just decide that they just don’t like you, they just don’t want to sell to you for any reason because they don’t want a business relationship with you. We have a saying in negotiating that time kills deals. Take it to heart, whatever you’re in a negotiation and you got the key points you want. Don’t waste time fighting over the little stuff, get the deal done put your money on the table and move on to the next deal. Because there’s a Scarlet O’Hara’s says in gone with the wind. Tomorrow is another day and there’s always another deal. I’m Cliff Ennico for sbtv.com.