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Negotiating vital for success

Negotiation.

What a great word. What a great concept: people communicating with each other and arriving at mutually agreeable solutions to conflict. What's not to like in that notion? It's infinitely superior to other words and concepts, like "war," "domination" and "hostile takeover."

And yet, the mere mention of the word "negotiation" is enough to send waves of fear shivering down the spines of some of the best entrepreneurs I know. From what I can see, people in our culture don't understand the art of negotiation. But if you are going to be successful in business, you need to know how to negotiate or you will be taken advantage of.

For some reason, I love to negotiate. There are days when I'd rather negotiate than eat (and if you've seen me, you know I love to eat). Here are some principles I have learned through countless negotiating sessions, both good and bad.

You will never make more money per hour in your life than when you are negotiating, so take it seriously. Say you want to buy a house that is on the market for $180,000. You offer $165,000, they counter at $175,000 and you say, "Let's split the difference," and you agree to pay $170,000. All this could take place in less than an hour and you have saved yourself $10,000. Not bad pay for 60 minutes of work, even by today's standards.

Don't get locked into round figures. For some reason people seem to prefer working with big, round numbers. In the above illustration, there is no reason you need to move at $5,000 increments. Smaller bites can still save you a lot of money, plus they are easier to swallow.

Deal from a position of strength. Know exactly what you are willing to pay. Have your bottom line firmly established in your mind. Then work slowly toward it.

Focus on how close you are, not on how far apart you are. Sometimes you may be closer than either party thinks. When you get within range, you might want to say something like, "We are so close here. It would be a shame for you not to sell your widget because of a few dollars. Why don't we just say yes and let's have it done, OK?" Sometimes it will work.

Use a legal pad and write down exactly where you are in the negotiation. Especially with protracted negotiations, sometimes people forget the offer that's on the table. I also restate where we are frequently so it is clear to everyone.

Agree quickly on points you can live with and work hard on the differences. There is no use discussing 10 issues when we can quickly agree upon eight, initial them and then concentrate on the final two. It makes everyone feel that real progress is being made.

Don't allow money to bog down the discussion. One of my favorite lines is, "If we set aside the cost, what are your other concerns?" Much of the time it comes down to money. If you can set aside money and work out the other details, then you know what has to happen to do the deal. All you have to do is work out the money issue, and you've got an agreement.

Identify the deal killers early. These are the points that must be agreed upon or else the deal is dead. This is important for both parties to know in advance.

Leave the negotiating table as friends. And the best way to do that is to emphasize doing the deal correctly rather than trying to make everyone happy. Doing the deal incorrectly can make life miserable for everyone, no matter how much you may — or may not — like the person sitting on the other side of the negotiating table.

Avoid the "any price" mentality. If you're thinking you're at a point where you have to do this deal "at any price," you're in trouble. The person sitting on the other side of the table will probably take advantage of it. You may be better off pleading for mercy than negotiating.

Don't get emotional. In most cases, this isn't life or death. This is just business. Save your emotional energy for your family, your faith and college football.


Stephen W. Gibson is affiliated with the BYU Center for Entrepreneurship. He can be reached via e-mail at cfe@byu.edu.