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COMMON NEGOTIATING MISTAKES
Business owners will comprehensively analyze every substantive element of a proposed deal and engage in serious due diligence to make sure they don't miss a substantive point. But then will wing it when it comes to preparing and engaging in the actual steps of negotiation. Mistakes in the process result. These mistakes translate into dollars lost. The following are examples of mistakes in the process of negotiating:
- Negotiating Before You Are Ready: Start by focusing on what you really want to achieve. What really are your goals? Sometimes this is clear-cut. But, stay with me. Use the following 3 step strategic framework: a. Set and prioritize your long-term strategic and short-term tactical goals; b. Determine and prioritize your counterpart's goals; and c. Evaluate the power of the relationship. Some of us excel at strategy. Others maneuver more effectively in a tactical mode. The best use both to achieve their ends. Concerning your counterpart, you need to figure out what he really wants. For example, if you are the prospective tenant, what the landlord may really want is not the maximum dollar amount but, instead, a long term relationship with a particular type of business operation. The third critical step in goal setting is to determine the value of your relationship with the other side. Negotiating a facility lease that may span 10+ years should involve strategies and tactics that are different from those required for a one-off purchase of a used vehicle.
- Negotiating With The Wrong Person: In my business, it is common to run into the "I don't have the authority from my client" gambit when negotiating with the attorney from the other side. Unlike my client, I do not have the ability to demand speaking with the person with the authority. This leaves me with the only option of also playing the same game. The less authority I have, the less I can concede. This is often sufficient to get the other attorney to slowly abandon the "no authority" game. You as the client, have ability/right to speak with the decision maker. Always make sure you are negotiating with the right person before getting into substantive negotiations. If the other person has the power to close the deal, you have the right person.
- Failing To Maximize Leverage: Always begin by evaluating each party's leverage at the start. Overall, leverage fundamentally relates to how easy it is for you to walk away; relative to how easy it is for the other side to walk away. But, the most effective negotiators know that everyone has the ability to change their leverage. For example, provide independently verifiable alternatives. And then, strike when your leverage is hot. If all else fails and you have no impending deadline, "just say no" and see what happens. (A Harvey Mackey suggestion).
- Locking On A Position: When you lock on a position you are deciding that there is only one specific solution. You are thinking that the solution must be what you have stated, or the deal just won't work. The fancy term for this is "positional negotiating." It is rarely true that the only solution is the proposed solution you present at the start of negotiations. The other side of the coin is when your counterpart locks on a position. Depending on your core personality, this may be show stopper. However, if you are able to shift from aggressive business person to a gentle teacher who is willing to share the history and background of the "proposed" deal, you have a chance. But, that is a tall order.
- Failing To Control The Agenda: Controlling the agenda can make a huge difference. Some tips about this issue: a. Printed or written words usually appear more powerful than spoken words. Prepare a written agenda. At worst, your counterpart will see you as organized and thorough; b. Control the environment. Easiest when you control the turf. Seating, office support, etc. can make a difference. When in doubt try to get the other side to meet on your turf; c. Decide beforehand whether and when to negotiate in person or via electronic communications (telephone calls, e-mail, text messages, telephone conference calls, etc.). And remember, efficiency is always important but, sometimes, face to face is the most efficient.
- Wandering Away From The Goals and Limits You Set: People too often start a negotiation with a set of limits and goals and then, as the negotiation progresses, ignore them. Without really thinking about it, they modify their goals downward and their limits upward. The best way to avoid losing sight of your limits and goals is to write them down, Let your notes be your guide. Changing your limits and goals as a result of acquiring more data is fine, as long as you are conscious that you are doing it.
- Not Knowing When To Shut Up and Take The Deal I have seen highly skilled professionals become, unwittingly, caught up in the process of negotiating; enjoying the process, burning up time, and never bringing discussions to a close. You need to keep the closing in mind as you prepare for your negotiation, as you listen to the other side and every time you speak. Be alert to the possibility of closing the deal at every appropriate moment. Some moments are more obvious than others: a. An acceptable solution is on the table; b. The other side wants to close; c. a real-world deadline is approaching; d. All of the negotiation goals are met; or e. You have better alternatives (closing meaning ending the negotiation).
No negotiation presents exactly the same challenges because too many variables exist in every negotiation. Yet, common strategies and tactics underlie success in most negotiations. And, common mistakes can undermine most negotiations.
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