Negotiating Tactics
This has been a really big year for me in terms of negotiation. Specifically, I've negotiated a book packager, ownership, partnership, and multiple work-for-hire agreements.
When I negotiate, my goal is to get the best deal that I possibly can on terms that will motivate the entity that I'm working with for the short- and long-term. When I think about a negotiation, I see the following chart in my head:
Each party has their lower limit on how far they're willing to be pushed. If they go below that limit, it often means that they entered into a bad deal that will not motivate them, or they didn't really have a choice. The area in between the lower limits is where the potential for mutually-beneficial, voluntary exchange exists. Below are some of the best practices I've gathered from the mistakes I've made this year:
- Always Introduce Competition. Once you find a company or individual that seems like a good partner, it's tempting to be lazy and just start negotiating with them. It is critical to bring in their competitors so that:
- You know what your other options are.
- They know that they can't push on certain points.
- They have an added threat if they do not work with you.
- They have an added incentive to work quickly and not drag you along.
I used to think that I would hurt people's feelings if I did this, but I think that this is just how business works and most professionals understand this.
- Know Your F-You Point. Being able to walk away from a deal gives you extraordinary power.
- Build Trust By Being Honest. Trust is key. If you don't trust the other party, you will spend a lot more time negotiating and with legal fees. Furthermore, as a small business person, a contract only protects you so much. When you have a negative net worth, it is often too expensive to enforce a contract of someone who cheated you.
- Understand Everything. As a young entrepreneur, it is tempting to get stars in your eyes when you're working with a big company. When somebody says this is "typical in this industry", I think the worst thing you can say is, "ok". When you say that, you essentially bypass your own logic. It is important to understand ALL the parts of a deal and enter into an agreement that makes sense to you. The second you bypass your own logic is the second you open yourself up to being taken advantage of or entering into a deal that doesn't make sense. The devil is in the details!
Posted at
12:44 PM
|
Comments (5)
|
Top
June 14, 2006
One-Day Entrepreneurship Conference on June 26 in New York City
In previous posts, I've linked to Venture Voice, the top podcast for entrepreneur interviews. I'm not exaggerating when I say that I've listened to every single one of his 34 1-hour shows. All the shows have great entrepreneurs and are high-quality.
Well, the creator of the podcast, Greg Galant, is putting together a one-day conference on entrepreneurship. Below is a blurb on it:
At the Venture Voice Startup Workshop on June 26, 2006 in New York City, you'll interact with top entrepreneurs and venture capitalists to find out how to start and grow innovative businesses. Venture Voice, a podcast known for asking the hard questions about entrepreneurship, brings together highly successful speakers who've gotten their hands dirty growing businesses. This full-day event will be intense. Participants will leave with tactical knowledge about growing a business and with the inspiration to do so. You can find more details and register at http://www.venturevoice.com/workshop/.
Greg has allowed me to give a $100 discount to my readers. Just type in the following referral code: "success".
