Whether you’re a business owner trying to negotiate a price for goods or a consumer purchasing an everyday item, striking a deal is tricky. Over the course of our careers and lives, Scott and I have negotiated numerous deals on behalf of clients — and for ourselves in our daily lives. We’ve nurtured a mindset that can find common ground in any type of negotiation.
Although each business deal has its own individual story, there are recurring threads that, irrespective of the specific details, will steer a negotiation in one direction or the other — towards a mutually beneficial agreement or no agreement at all.
When you’re sitting at the negotiating table, here are important considerations:
- Have an Abundant Mindset: Many people feel that negotiations are bound to be either a) “I win/you lose” or b) “you win/I lose” arrangement. The mere presence of this type of mindset often results in mistrust and/or miscommunication that will negate the potential for a successful deal. Having an abundant mindset means believing that both parties can feel good about the result. This is the classic case striking a win/win proposition.
- Consider the Alternative Point of View: Over the years, we have encountered negotiations during which one side insists on a specific term or wording that either a) does not make sense to us or b) is seemingly not helpful in achieving the overarching agreement’s objective. It’s helpful to do a deeper dive into the “why” by putting ourselves in the other person’s shoes. Because Scott and I come to the table with a financial perspective, we evaluate the request in terms of revenue and expenses to understand the economic impact of the ask. At that point, we can determine alternative ways of achieving the other side’s economic objectives while still maintaining our side’s objectives as well. Viewing the people on the other side of the table as colleagues rather than enemies can provide the space to examine and ask the clarifying questions.
- Prepare, Prepare, Prepare: The most common negotiation that we encounter in our roles as Fractional CFOs is around compensation. In these types of negotiations, it is imperative to understand what the market rate is for a particular skill set or job function in your company. When an employee says, “I need a raise” or “I’m not being paid enough”, it is always easier to have facts readily available and provide data on the median salary for the type of position and location. Negotiations can be emotional; the best deals focus on facts rather than feelings.
- Be Prepared to Walk Away: Even after considering the first three bullet points, you might not be able to find a mutually beneficial agreement with the other party. If you can’t meet the objectives of the other side without sacrificing what is important to you and your company, then the best deal you can make is the one you don’t. It’s crucial to understand what your goals are in the negotiation, the financial advantages of doing or not doing the transaction, and if there are any items that you can, or cannot, live without. And ultimately, if your gut or intuition is telling you that something doesn’t feel right about a specific transaction, then you should walk away and not look back.
During negotiations, you should always anticipate a tug-of-war or spirited discussion. But if you are able to maintain objectivity throughout and stay focused on why you are seeking to make a deal, you will always be able to conduct yourself in the most productive and thoughtful manner.
Take-away: If you feel like you’re entering into a potential deal that requires financial guidance from experts or need someone to help you prepare for contract negotiations, please contact Brian or Scott at firstname.lastname@example.org.
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