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How To Negotiate For Your Business

Everyone can walk away a winner if you try this negotiation technique when coming to an agreement with your start-up's clients or collaborators

Thug Life

I had a high school wrestling coach who loved to throw hypothetical scenarios at us during practice. They had nothing to do with wrestling. Instead they were life lessons that he tried to impart by way of asking us to unravel difficult problems, while we were bordering on passing out from the tenth round of spin drills.

One that has stuck in my mind for the past 40 years went like this:

You find yourself in backstreet alley with three tugs who want to get into a fight. There’s no way to avoid the altercation. The only way out is through them and it’s inevitable that you will have to take them on. One of them is much bigger and stronger than you, and far more threatening than the other two, who both appear to be easy enough for you to deal with. The question: In order to win who do you take on first, second, and third?

Think about it for a minute. Got it? Good, read on.

The strategy most likely to result in a “win,”  according to my coach, was to take on the big guy first. Dispatch that threat while you have all of your energy. Why waste time, wear yourself down, and risk injury on the other two who will likely head for the hills when they see how easily you take care of Mr Big.

The life lesson was that winners take on the big challenges first and let the smaller ones take care of themselves.

Generally speaking, it’s a wonderful life philosophy and it makes great sense in many cases. Why get mired in minutia if you have really big challenges to take on?

Still, it always struck me as a bit backwards to start with the biggest basest guy. Personally, I’d prefer to buy time by getting rid of the two less threatening thugs, work up a head of steam, get my adrenaline pumping, and build some confidence in my bad-assness–all the while working on ways to outsmart someone I may otherwise not stand a chance against. At the very least, I’d end up with only one adversary to deal with. My coach would have said, “Koulopoulos you’re overthinking it.”

Clearly, we can debate the right strategy until the cows come home.

From Backstreets to Boardrooms

However, years later I’d find myself referring back to that same scenario but in a very different context; one that didn’t involve backstreet brawls in an alley with leather-clad thugs, but rather business negotiations in nicely furnished boardrooms with wingtip shod execs.

At first my negotiation style was to take on the biggest baddest issues at the outset. After all, if I couldn’t get my way with these, why bother negotiating details. I’d dig in my heels and try to out power my opponent. Sometimes it worked. I’d get my way as long as I was dealing from a position of leverage where I held most of the cards. But often the collateral damage to the relationship or partnership was considerable. And, on more than a few occasions, I’d reach an impasse which stalled or ended the negotiation.

What I came to realize was that I was focusing on the win as though it were a singular objective and zero-sum, when in virtually every negotiation there are numerous things to be decided and many individual wins. While their may be one central item to negotiate, it’s always surrounded by a constellation of other smaller items that can act as either significant obstacles on the road to getting the negotiation done or be perceived as individual wins for both parties.

Back to our alleyway.

The big issue, or the central one, is always your ultimate objective in a negotiation. Which is why we all intuitively want to take it on first. But this is like taking on the largest thug first. You’re starting with the fight that has the greatest risk of failure.

The strategy that I’ve found to be invaluable in negotiations that get hung up on the intractability of the central issue, is to take a non-intuitive route.

  1. First, take an inventory of all the items to be negotiated.
  2. Second, identify those issues that you have high confidence in being able to come to an agreement on.
  3. Cluster similar items together so that you have groupings of several smaller issues that you can dispatch with relative ease as a group. (i.e. If we agree on A then we should be able to agree on A1)

I’m not saying that you should willy-nilly give away leverage. But instead, focusing on items that are relatively easy to come to an agreement on establishes a positive trajectory for the negotiation.

This may seem like wasted effort since the big issues are still the ones that can kill the deal. However, smaller issues can be just as destructive if they are left until the end. I’ve seen far too many negotiations sidelined or derailed by a relatively tiny thing that comes up at the very end, just as pens are being picked up to ink the deal.

In addition, consider that if you are negotiating the toughest issues and making absolutely zero headway both parties will eventually get the impression that there is no possibility of reaching an agreement.

By taking on the smaller issues and agreeing on them you create a track record of success and proof that a positive outcome is possible.

Hold That Thought

So, what is the most powerful phrase in this scenario? Simple, when faced with an issue that can cause the negotiation to permanently stall, say, ” Let’s set that aside for now and come back to it later.”

Effectively, what you’re doing is putting our hypothetical Mr. Big on the back burner while you take on the challenges that you know are more easily dealt with. You will come back to Mr. Big, you have to, but you’ll also prove that progress is possible, you’ll develop a dialoge that forms the basis for future agreement, and you’ll illustrate a clear intention to move forward.

By the way, although the strategy I’m describing is typically for setting aside big issues in a negotiation it isn’t limited to them.  You may also end up using it to delay a smaller point in the negotiation that has, for whatever reason, turned into a large stumbling point.

Using this strategy also doesn’t mean that you will always set aside the central issue. If both parties are ready to address the central issue, and making progress, the last thing you want to do is switch gears.

There is nothing magic or manipulative in doing this. It’s simple and utterly transparent. In many ways what you are doing is giving license to both parties to proceed in developing a trajectory that leads to agreement rather than one that gets mired in disagreement. In addition, if the other party does not want to come to an agreement this strategy will make that abundantly clear since they will not agree to setting anything aside but rather look for excuses to impeded progress.

Be sure to make it a point to consciously come back to the issues that were set aside by pointing out that you are now going back to something you had earlier agreed to delay. This shows that you were not being dismissive of the issue and have every intention of working through it.’

Does this work in every negotiation? No. There are clearly other things that may influence a negotiation. However, I can tell you that in my experience, no matter the size of the deal, from negotiating with your child, spouse, or partner, to buying and selling a multimillion dollar company, I’ve used this approach consistently with great success. In fact, I cannot recall a negotiation where it didn’t help.

As for the advice of my wrestling coach. Well, let’s just say that what works in the boardroom, where everyone wants to walk away a winner, may not necessarily work in a backstreet alley, where someone is always going to lose.

You’re not alone – you’ll write, improve, and develop your 60-second pitch for your business, which is crucial to communicating your business’s values and purpose to potential clients and partners, at Start and Grow Enterprise’s free start-up courses. Get in touch and we’ll give you a hand.

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