Want to be a better negotiator?

 

Every transaction in life is a negotiation.  Don’t you agree?  Most business owners acquire new skills to optimize their business and practice those skills but my clients also want to learn to be better negotiators.

Here are a couple of ideas to improve your approach.

I. The three essential issues most negotiators overlook until there is a problem.

    1. Your Maximum Gain and Maximum Exposure.
      • Do you know the most you can obtain, win, earn, pay from the contract you are about to sign?
      • What is the one-line (or one word) worst case scenario?
      • What is the other side’s answer to this same question?
      • What does the agreement say about the limitation of liability?
    2. Are you crystal clear about what you are obligated to deliver under the agreement and by when? What about the other party?
    3. If you or they do not perform, what Is your remedy? 

Let’s say you’re negotiating a services agreement (cloud management services, architecture services, any services.)

    • What happens if you do not perform? Is the first thing that happens a lawsuit? Doubtful. What do you do to (a) confirm that the deliverable is completely satisfactory; (b) to repair any part of the service deliverable that is not satisfactory? (c) Even if it is not in the terms of your agreement, what is your plan/policy/practice to solve this issue?
    • Quick Story on Microsoft: Early in my training I negotiated a multi-million dollar revenue transaction for cloud services with Microsoft.  Microsoft’s total liability was $999 – the cost of one copy of their server software – under the agreement no matter what. Since we knew that from the beginning, we had to understand that our ability to recover if something went wrong was $999.  The problem was: we needed the agreement. Does that info change your negotiation approach?
    • Bonus: How Much Do You Know About The Otherside’s Ability To Solve Problems that Will Occur? 

II. The #1 best use of your negotiation time to immediately make you less risk exposed.

  • Flush Out the Duck. You need to find leverage.  Leverage comes from information. It is often said that the first to speak loses. That is not true.  If you ask more questions than the other side and learn more, you win. The key is knowing exactly what answers you NEED (not merely want) to know. If you become smarter after you speak to the other side than you were before, then you might gain leverage.

III. Information you need before you spend time negotiating with anyone over money.

  • Does the person on the other side have the authority to make the changes and negotiate the issues you are discussing?
  • Do you know exactly what you will do if the agreement negotiation is aborted by you or the otherwise? (ie, if you agree not to move forward?)
    • For example, if you are making an offer on a piece of real estate or software, do you have a second, third, fourth choice? If the deal is critical, I recommend having at least two back-up plans.

IV. The best question to ask your lawyer to see if they are a fit for you.

I encourage my clients to ask me hard questions.  One of the hardest questions to answer is “have you worked on the exact same type of deal like mine before?”  Even though it is hard, is can be answered. Here is  – in my opinion today – the number one best question to ask your lawyer to see if there is a fit.  But before I give you the question, you must be willing to hear the answer. And the answer might be essentially back on you, the client.

 

“For the next ten minutes, please ask me every question you can think of so that you, attorney, can understand exactly how I make money and the risks I take to deliver on my business promise?”

I am amazed by how little attorneys often know about their client’s businesses until they are in the midst of a crisis.  I am also amazed by how willing clients are to get help to clearly explain what they do, to get help uncovering potential problems in their delivery of what they offer and in identifying the barriers to growth.

Gregory Rutchik

Gregory Rutchik

Attorney at Law

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