The Negotiation Guru

This can cost you a lot of money if you fail to understand all the terms and conditions. Always make sure that all the terms are properly negotiated before the end of a negotiation. Do not take things for granted.

I recently learned how important it is to negotiate all the terms and have the terms documented. Do not rely on mutual trust.

The setup

I had to buy a car to travel to work and decided to buy it from a friend. Let’s call him Jerry. The car was not in a good condition but Jerry had to sell it off. Deciding to do Jerry a favor, I agreed to buy the car from him.

There were 2 rounds of negotiation for the car.

During the 1^st round, Jerry offered a price of X amt and he will pay for the transferal fee of title deed. As X amt was not justifiable due to the condition of the car, I decided to negotiate with him two weeks later.

For the 2^nd round, Jerry decided to drop the price a little. I was still a little hesitant. Many friends discouraged me from buying the car. Since I gave him my word earlier, I decided not to negotiate further.

On the day of the sale, he said to me “Jens, you are paying for the transferal fee.”

That took me by surprise. I was living under the impression that he was paying for the transferal fee.

His defense line was, “since it was not mentioned during the 2^nd round of negotiation, whatever that was negotiated during the 1^st round would not be valid.”

He was right. I was the one who made the mistake of not making sure the condition would still be valid after the price reduction. My assumption was wrong.

The transferal fee was equivalent to the reduction in price he gave in the 2^nd round. At the end of the day, I was paying the same amount.

This entire transaction was based on relationship and trust. I did not feel the need to document everything. That was my fatal mistake.

Point to note: No matter who you are negotiating with, always make sure every term is made clear and documented. This can save you much trouble and even the relationship. The person you are negotiating with might not treasure the relationship as much as you do. Never take things for granted.

Remember: Always negotiate every term and condition. Document all commitments.

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Jens Thang
Negotiation Skills for Everyone

Email: jens@thenegotiationguru.com

Before you step into the negotiating room, you have to consider many things. One of the things that you should consider is “what other options do I have?” Answering this question will alter the way you negotiate with the other party.

All skilled negotiators know their objectives before they start negotiating. They also have a bottom-line ready in case they need to walk away from the deal.

Apart from having your objectives and bottom-line, you need to consider your alternatives.

“What will I lose if there’s no deal?”

“Is there a better option?”

“Do I have another offer?”

“Can I get this from another firm?”

Think through all the possible alternatives that you can have. There are usually more alternatives if you look hard enough. One of the common mistakes a negotiator make is to think that they have everything to lose if there’s no deal. This will change the way you negotiate. Be really careful of this.

Never be too focused on trying to close the deal.

Imagine you have to shop for a birthday present for your best friend. You decided to get him a red tie.

Now there are 2 scenarios:

1) There’s only 1 shop in this world which sells red ties

2) There are 10 shops in your neighborhood that sell red ties

The way you negotiate in the 2 different scenarios will be vastly different. If you think that there’s only 1 shop in this world that sells red ties, you probably haven’t looked hard enough. There’s probably another shop that sells red tie just round the corner.

Having alternatives will improve your leverage when you negotiate.

Remember: Always have alternatives before you start negotiating.————–

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Jens Thang
Negotiation Skills for Everyone

Email: jens@thenegotiationguru.com

Definitely! You can have too much power when it comes to negotiation. This happens when you know that the other party has much more to lose should there be no deal. So, can having too much power be a bad thing? Yes.

When people have too much power, they tend to be arrogant. Your arrogance will show in the way you negotiate. You want to make the other party feel that a good relationship is being built in the process of negotiation. You should not make her feel that she is being bullied into closing the deal with you. Let the other party leave the negotiating table feeling victorious.

The other party will appreciate that you do not abuse your power. In return, there might be a higher chance of her returning the favor to you. If you do follow the law of reciprocity, you will understand that it pays to be nice (sometimes!). Believe in Karma.

In a business negotiation, you want to aim for a healthy working relationship.

Having too much power can cause you to underestimate the other party. Power is a perception concept. How much power each other has, depends on how the other party perceive them to have.

You might think that the other party is weak and therefore underestimate his power. This can be dangerous. Never underestimate the party you are negotiating with. The power balance in negotiation is dynamic. It changes every single minute. I will discuss the dynamism in the negotiation process in my later posts.

Remember: Even when you have a lot of negotiating power, do not abuse it.

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Jens Thang
Unleash The Negotiation Guru In You!

Email: jens@thenegotiationguru.com

Classy negotiator?! Is there such a thing? I believe there is. A negotiator is not always about being competitive, collaborative, avoiding and the whatnot. Whichever type of negotiating styles you have, you can still be a classy negotiator.

What’s a classy negotiator? Someone with class. Simple as that.

This does not mean that you have to put on your Hugo Boss suit that is tastefully designed and tailored. It means that you always maintain refined grace.

Being a classy negotiator means that you do not speak ill of the other party (before and after the negotiation). Instead, speak well of them in public.

Some of your peers might come up to you and say, “that guy is an ass.” Stop them. Correct them.

A classy negotiator will say, “well, it’s a pity that the deal did not work out the way both of us wanted to. We are still on good terms and looking forward to dealing with each other again.”

This is absolute class. Instead of trying to badmouth (or bitch about) the other party, you say good things about them.This is not being fake or phony. This is about respecting the other party. Putting the other party down and shifting all the blame to him for not being a good partner is a loser way of approaching things. Don’t act like a kid. Behave graciously.

Accept the fact that when a deal breaks down, it’s the fault of both sides. Never the fault of his alone.Having this mentality will change the way you deal with people. Have a positive outlook on everything.Believe that no matter how tough the party is, he has positive intentions. Perhaps both parties interests just don’t match.

Remember: Be a classy negotiator.

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Jens Thang
Unleash The Negotiation Guru In You!

I had a meeting with an angel investor earlier this week. She had started 4 companies in the last 30 years. Now she’s looking at startups to invest in. She talked about her experiences as an entrepreneur and how she had to negotiate with her board of directors, investors and banks.

She pointed out that a lot of deals die because one party is too tired. This is absolutely true. A negotiation can be a long and tiring event. No one likes to negotiate for long hours. There are people who even fear to negotiate.

How do you prevent this? This is specific to entrepreneurs who are looking to negotiate with venture capitalists or other investors.

1) Keep up the momentum

2) Do due diligence on investors

3) Keep valuation of your company in perspective

4) Ignore minor issues

5) Understand the term sheet and its implications

A lot of negotiations ended up negotiating over trivial points. This is the very reason why a lot of deals die.

What’s really important in a negotiation? What’s important to you? What’s important to the other party?

As I was driving this morning, I discovered something about human psychology. Or rather, I was under the effects of human psychology. I was driving and decided that I should take the right lane as it had faster traffic. As I drove on the right lane for 5 mins, it became really slow. Cars were moving very slowly, and the cars on the left lane were zooming past me. Subconsciously I was telling myself, “The right lane will be faster, I am pretty sure about that”. I stuck to my original decision for a good whole 10mins.

Suddenly, I realized that I was not making a rational choice. I should have switched to the left. So why didn’t I do that?I had invested too much into right lane. To prove that I was right, I stuck to my own decision despite it was not a rational thing to do. This is common to investors who invest in the stock market. They always sell the stocks that are earning and keep the stocks that are losing money. And this is because they want to prove that their initial judgment is right.In negotiation, we often get too committed to a deal. We invest our time and effort into preparing a deal and negotiating it. As time passes, we grew more committed to closing the deal. People say yes to a bad deal because they have invested too much and feel that they will lose more if they have no deal.Avoid getting hooked into such a situation. Always have a bottom-line and never compromise on your goals. Sometimes, no deal is better and a bad deal.

Many seasoned negotiators will tell you, never to say “No”. This is true. It has huge psychological effects and will dramatically affect the results of your negotiations. Even if you do not agree with the proposal, use other ways of saying “No”.

Never give a straight “No” answer.

1) “I don’t think this really works for me.”

2) “Can I suggest another alternative?”

3) “Maybe we can discuss this further.”

4) “I like your proposal but there are some points which I will need to clarify.”

5) “Let me think about it, I will get back to you.”

6) “I can’t do this but I can…”

7) “I understand your situation but I can’t confirm anything until …”

Always be polite, yet firm. Not that you have to be nasty to be firm. Recall how you were turned down by others in subtle ways. Learn from them. It can avoid hurting the other party’s pride as well.

Remember: Learn to say “No” in as many different ways as possible.

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Jens Thang
Unleash The Negotiation Guru In You!

Email: jens@thenegotiationguru.com