For the starting entrepreneur with very little leverage and almost no revenue, the conventional rules of negotiation don’t apply. You’re the boss, so this means you’re in charge of everything. Is your landlord trying to increase rent – negotiate for a bargain, are clients asking for lower prices – negotiate for a bargain, does your staff want better working conditions – negotiate for a bargain.
In business there are very little things that are non-negotiable. However, if you don’t have the skills you’ll never become a skilled entrepreneur. Why pay more for something you know it’s worth less? Why should you listen to your employees do whatever they want around the office, when you’re the one calling the shots? Entrepreneurship is not for everyone, so if you want your business to enter the first league, mastering the art of negotiation is a must. Consider the following negotiation tips to strengthen your tactics and show everyone what you’re really made of.
How to negotiate with fellow investors
Conventional negotiation premises tell us that before entering a negotiation we have to understand our BATNA. Companies struggling to find an investor should throw their BATNA out the window. Yes, that’s right. You need a different approach:
- Don’t let investors see you’re nervous – investors will never put their money into a company (entrepreneur) that doesn’t look confident. You may not have a lot of capital, but if you exude confidence you have great chances of closing a good deal
- Clear out investment terms in advance – know your numbers before going into a meeting with potential investors. If your pitch is not exact and you’re not able to give concise answers, people won’t take you seriously
- Don’t give up too much equity – is your business idea really good? Are investors looking to come onboard but they’re asking for 60% of the company? Well then, you might want to renegotiate those terms. You can’t lose control – every good entrepreneur knows that already.
We have a winner, or not
People wrongfully assume there’s always a winner/loser among the participants of a negotiation. But entrepreneurs know best; just because you debating a matter and asking for something it doesn’t mean you want to outshine the other party. A business negotiation must suit both parties involved, which means compromise may come along as a referee so to speak. Bottom line, you’re giving something up so that the final deal can be accepted by everyone involved.
Not every idea is a million dollar idea
Most entrepreneurs, especially the new ones, believe that their ideas are the best. When you’re passionate about something and you truly believe in your business, it’s difficult to admit defeat. When an idea doesn’t work or they’re no way to make it work, you have to let it go and think of something else. One of the biggest mistakes people make in business – they get attached. It’s like love. It blinds you and forbids you from seeing the truth. Answer yourself the following questions: did I do everything in my power to make my business work in the last 3 years? Has my business brought any benefits to me?
If you’re answer’s NO, then it’s time for a new idea. Leave the past in the past, learn from your mistakes and you have great chances to succeed in the future. That’s what entrepreneurship is all about.
Pay attention to the good cop – bad cop routine
Skilled negotiators are used to employing all sorts of negotiation tactics. Among one of their favorites is the “good-cop/bad-cop strategy“. Often used by law enforcement to intimidate witnesses and make them snap, in business the principle works similarly. Your opponent will seem all friendly and agreeable at first; he will offer you a pretty sweet deal, charm you with his words and really fancy company details. But when the papers arrive your opponent’s lawyer will suddenly make a mistake and instead of typing 20% equity, he will type 25%.
That super friendly opponent will start blaming people, he might even fire the lawyer only to gain your confidence and persuade you to take the new bargain. You have to stick to your guns otherwise you’ll never become a skilled entrepreneur.
Do you have what it takes to be an excellent business owner? Are you up for the challenge? Entrepreneurship is not just about giving orders and doing nothing. Great accomplishments can only be achieved if you’re a good team leader. So be one!