Featured in Alltop StartUpRoar

Friday, July 19, 2013

4 Tips for better negotiations

Let's look cute to this stranger and see if we can negotiate several treats!
A negotiation is a process that allows parties to engage in a relationship to obtain something they need or want in exchange for something they are willing to give in return.  This occurs in everyday life.  For example, your child requests a toy and promises to be good in return.  You say if Dad approves you will buy the toy.  The child tells Dad “if it is OK with you, it is OK with Mom.”  The Dad agrees to the toy purchase.  The child returns to the Mom saying, “Dad says OK”.  A negotiation took place where the child uses promises of being good along with the knowledge that Dad always says yes.  The child wins the negotiation and the desired toy.

Tip #1 - Negotiating starts at your first interaction

We learn negotiating skills very early in life and try to improve them as we age.  The one piece that is not immediately recognized is that negotiations start with first contact.  The parties start to develop an understanding of each other, their personalities, their likes and dislikes.  They may learn something about how much a side is willing to give and how important the item or service is to that individual.

Negotiating requires development of a relationship with the other party.  The better you understand the other side and their needs the better you can relate to them.  Secondly, negotiations require a bit of salesmanship.  The ability to communicate the positive attributes make the item or service appear more attractive and thus worth more.

You are negotiating even before you start formal discussions.  What you say in early discussions and any information you provide may send clues regarding what you may accept or how you will react.  Convincing the other side of the value of the asset helps create a desire for the products or services.  The more they want or need what you have, the more you may get in the transaction.

Tip #2 - Learn as much as possible

Learning as much as possible about the topic helps you obtain more of what you want.  For example, suppose you are selling something at a garage sale.  The item may have some historical value and possibly is an antique.  Someone expressing interest may view it as just something old and would attach a much lower value.  Your knowledge shared with the person can help demonstrate why they are offering too little for the item.

The same goes for deals in the work place.  The more knowledge you have about the subject under negotiation, the better your counter arguments.   Logic and reasoning can make your offer seem as a more correct one.  In short, the more you can prove your point with data, the better your chances to win the other side over to your arguments; i.e. you get more of what you want.

Tip #3 - Watch where you set your anchor

An anchor is a set point that helps keep the discussions closer to a value of interest.  For example, you go to a restaurant and the menu shows a price of $250 for a bottle of wine.  The next price down is $80 for a bottle that is likely suitable for the meal.   You are thinking of the high price of the first item, which may make the lower priced bottle appear acceptable.  The higher priced bottle serves as an anchor and causes you to evaluate everything else on the menu relative to that high price.

The same is true in a negotiation.  You can make an offer of a higher price or a lower price.  These can serve to anchor the discussions or they can be deterrents.  Unrealistic offers (i.e. extremes of higher or lower), may cause the deal to fall apart because the offer is not reasonable.  The perception that no logical argument will bring the sides closer together can end the negotiation on the spot.  Selecting defensible terms (on the high side or low side) allows for better discussions potentially yielding more of what you want.  The key is to be reasonable and be able to show why the offer is fair. 

Tip #4 - Do not be afraid to walk away

WIN-WIN deals last longer, work better, and are optimal if you can achieve this as a goal.  This requires the parties to work together and understand the other side’s needs.  It is imperative that the parties take time to understand what constitutes a win for the other side.  You learn this information in various interactions by asking and discussing the other side’s needs.

Sometimes, the other side is not willing to be reasonable and has a winner take all strategy of negotiations.  You must always be prepared to walk away from a negotiation if the deal does not work for you.  You may not get what you wanted, but you do not end up with a poor deal that you will live to regret.  The other side may change their tactics if they see you willing to walk away.  So, always keep it as an option.

Other articles on the subject: Bring something to the party and win twice maybe even thrice. 

Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon 

Wednesday, July 17, 2013

Organization and consideration help in the tough spots

I wonder where that Contract with Big Co is located?
Trash is trash unless you decide the items are antiques.  Coins have a face value unless they are collectors’ items.  Patents are valuable until you are paying huge fees for patents that will never protect your commercial product.  Accounting documents are extremely important to your business unless you do not keep them properly or miss file them, then they may cost you money.

Organization, document filing, and cataloging of assets is critical to your company and the skills help protect the business in the unfortunate situation where key people are no longer available.  Take for example a company that required 4 audits over a 6 month period just to bring the financial files into compliance and obtain the proper opinion letters from the auditors.  The filing system was a mess and prior record keeping was not effective.  The costs of 4 audits and the housekeeping required to finalize the process was costly!

Patents are very important to many companies.  What happens when the cost of maintaining the portfolio reaches a very large number?  Weeding out of unnecessary patents becomes the only way to reduce the costs.  This is housekeeping but it usually happens when finances become tight and you try to trim the expenses.  Consider regular reviews because you may save money and time.

Have you ever worked next to a coworker that was a bit like an oil slick?  They start in a small area and their stuff creeps and creeps until they cover a massive amount of territory.  Then someone has to require either the worker to clean up or worse yet, you have to do it because the worker is no longer there.  Then finding all the critical items or documents becomes a huge task.

Some people take a lifetime before they decide to review their stuff and organize it.   Occasionally, they leave before the task is completed then others must weed through everything and identify the items critical to retain.  Antiques, valuable coins, titles, tax returns, contracts, agreements and much more become either valuable or trash!  Making those decisions is not easy and the time required can be extensive.

The issue is that learning to keep documents and other items organized is essential for transition or maintenance.  A business that does not learn to manage their documents and assets will be doomed to waste time and money on clean up at the most inopportune moments.  Storage of long-term documents and assets are great, but where are they and how are they valued.  Eventually, someone may need to convert the items to cash or enforce agreements.   Retaining original signed copies of agreements is important when one wishes to seek legal remedy for breach of agreements.  If you do not remember where they are, your search may turn up empty at a critical time.

Thinking ahead and developing organizational skills can save time and money.  This is the case whether you are planning disposition of assets after death or your company is considering raising capital, merger, acquisition, sale or liquidation.  Organizing documents and assets is important.  You may also need to foster consideration for the others in your business by finding ways to prevent the “oil slick” types from expanding too far. 

In the words of a wise man, “a word to wise should be sufficient!”  Starting a business has lots of busy work and planning that may shift your thoughts away from good organizational skills within the business operations.  Try to keep the organizational skills and spring cleaning urge as part of your thinking.  It may save you time and money in the future!

  Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon