A new book from a negotiation expert offers strategies to take the fear out of high-stakes conversations.
Over the past 20 years, I have advised many CEOs and senior executives who were selling companies, buying companies, negotiating with critical customers, and crafting partnership and supplier agreements. In all these high-stakes negotiations, I have found that fear holds people back from achieving their ideal results. These fears -- of losing the deal, having the other side walk away, securing a poor outcome, getting embroiled in conflict, or damaging the relationship -- impede both experienced and novice negotiators.
In my new book, Negotiate Without Fear: Strategies and Tools to Maximize Your Outcomes(Wiley), I share strategies that can help you banish fear and get the results you want out of any negotiation. Here are some tips from the book:
Put the right issues on the table.
Many expert negotiators get trapped negotiating the wrong issues. Instead of negotiating what is "standard" or "typical," first consider your objectives. If you are negotiating with an enterprise customer, you might want to build a relationship with that company's senior leaders, differentiate your product, get the customer to do more business with you than with your competitors, and maximize your price. For each of these objectives, you should include at least one negotiable issue. For example, to expand your footprint with the customer, you might negotiate a dedicated on-site expert once a week to provide customer support, a volume incentive, up-front payment, and an exclusivity discount.
Before you begin, establish your ideal outcome.
Once you have the right issues on the table, establish an ambitious goal for the negotiation. Your goal should be based on the weaknesses of the other side's alternatives. For example, if you are selling your company, look at similar companies the buyer might consider purchasing, and identify what makes yours a better choice. If you are selling to a strategic buyer who desperately needs your unique product pipeline or your unprecedented market reach, then the buyer's other options may be very weak and you can ask for more. The more you differentiate your company by highlighting your unique capabilities, the weaker the other side's alternatives will be and the more ambitious your goal can be. In addition to setting a goal, build your own options by exploring other potential buyers. Your best outside option will be your biggest source of power in any negotiation and will determine your bottom line.
Follow the "Five Fs."
Once you have finished preparing and are at the negotiation table, there are five strategies I recommend to eradicate your fear: go first, focus on the other side, frame the offer correctly, be flexible, and never make a feeble offer. Here's how they work.
When you make the first offer, you can establish the starting point and set the table with the right issues. This gives you a tremendous advantage in the negotiation. (Don't email your offer -- convey it in person or on a video call so you can see the other side.)
Lead with an offer that describes not how the deal can benefit you, but how it can solve the other side's problems. Say you're selling your company. Instead of leading with the valuation you expect, talk about how your product pipeline can protect the buyer from competitive threats and soothe analysts' concerns about their business by helping recover customers they've lost.
Notice how the rationale for the sale of your company is framed in terms of losses, using phrases like "competitive threat," "analysts' concerns," and "lost customers," rather than more positive terms like "benefit," "advantage," or "value proposition." Research shows that people are more likely to take risks -- such as purchasing a business -- to avert losses, and more likely to maintain the status quo when it comes to potential gains. Loss framing will also create a sense of urgency for the buyer.
You can demonstrate flexibility in two ways. First, rather than providing a single offer, present three offers at the same time that appear different but are equivalent in value to you. This makes you look cooperative while allowing you to anchor a more aggressive starting point, uncover information about the other side's priorities, and secure a better outcome. Then, be ready to concede. Concessions will give the other side the sense that they are getting a great deal -- even though your initial offers exceeded your actual goal.
Finally, be sure that you are making a clear, specific ask, not a feeble request. For example, when negotiating with a supplier, don't just ask for a better price. Instead, show how you can help the supplier achieve their growth targets and expand into new locations.
As an entrepreneur, you're constantly negotiating -- or overseeing negotiators -- with customers, suppliers, investors, and potential acquirers. Improving the outcome of each negotiation will increase your revenue, decrease your costs, improve your margins, and position you to get the most out of your business. These strategies will take the fear out of negotiation and maximize your success.