The last month has been a battery of tests and lessons for me. The subject has been Negotiations 101.
I failed just about every test that I encountered. It’s been savage. Many mistakes were made and unfortunately, a few relationships have been damaged or lost entirely.
Below is a list of lessons that I have learned. The over-arching message that I can relay about negotiations is that no two are the same. People are different, situations are different, outcomes are different and the deal is always different. Do not treat every negotiation in the same way, nuance and subtletly are always required.
I cannot stress this point enough. It’s perfectly acceptable to walk out of a negotiation and come back later. Yes you will lose some ground but you wont commit to anything that you don’t want.
Recently I was negotiating the exit of a deal and received a call out of the blue from a very senior executive at the company. The call was unexpected and I had never dealt with this person before. I was caught off guard (which was definitely the intention of the call) and unprepared.
I fumbled through the conversation, staggered over my words and battled to get my point across effectively enough. Before I knew it, I had negotiated soft terms that were not in my favour.
When you are unprepared you also say things that you don’t want to say. These slip ups can lead you into serious trouble. This particular call and the mistakes I made cost me real money, not ego. It was a very tough lesson to learn.
Be prepared or hang up/walk out. There is no in between. You do not recover from being unprepared.
Most small businesses operate from a position of weakness. This is a mistake. If you’re going into a negotiation hoping for 50% you should start by asking for 80%. Everyone says that they understand this but when you’re in a room with three lawyers and a CEO you invariably beg for what you deserve.
Don’t beg. Start high and demand your worth.
Every negotiation I’ve ever been in has had an unspoken breaking point. The problem with an unspoken breaking point is that it’s unspoken. Each side knows what they want and works towards that. Very rarely do you define what your get up and walk out point is.
The key to working out your absolutely worst case scenario is to be prepared to deal with it if someone pushes you too far. A very important concept to understand is BATNA.
In negotiation theory, the Best Alternative to a Negotiated Agreement or BATNA is the most advantageous alternative course of action a party can take if negotiations fail and an agreement cannot be reached. BATNA is the key focus and the driving force behind a successful negotiator. A party should generally not accept a worse resolution than its BATNA
If you walk away from the deal on the table, what’s the alternative? If someone pushes you too far and you abandon the deal but still get to make $1m then you’re happy to walk away. If you walk away and your business dies then you better sit down and swallow the deal on the table.
The easiest way to get what you want in a negotiation is to ask for it. Often it really is that simple. You’re probably pitching yourself too low anyway so the chances are that you’ll make your opponent happy and you’ll both leave satisfied.
The most trouble that I’ve found myself in recently has stemmed from me not being open with my partners. Obviously you don’t have to tell everyone everything all of the time, especially in a negotiation. But don’t lie. Don’t be deceiptful. The more lies you tell, the more lies you need to keep track of. Gifted negotiators are taking notes, remembering facts and recalling them to their advantage.
Don’t be caught in a lie, it will do more damage than the alternative. I respect honesty above just about anything else. I hate negotiating with a liar. If you lie, I walk.
The best advice that I’ve ever received is that in a good negotiation both parties leave slightly unhappy.
That’s my aim for every negotiation. If one party is dominating then the other is exclusively unhappy. If it’s fair and equal then everyone almost gets what they want but misses out on some inconsequential things.
There is no honour amongst thieves. That saying should be: There is no honour amongst negotiators.
People will tell you that they have the best intentions. They’ll tell you that they’re good people. They’ll lie and tell you that they want what’s best for you. They don’t.
In a negotiation, the truth is that winning matters.
Great partnerships are built on truly honourable negotiations but these are hard to find.
Sometimes you have to realise that the person on the other side of the table is just out to win and not build a relationship.
These are the worst negotiations and the ones that you have to be the most prepared for. But don’t be taken advantage of. Don’t be the nice guy. In a negotiation, most of the time the nice guy does actually finish last.
Also published on Medium.