How to Negotiate Your Way to Success
The pros reveal the “art of the deal.”
Last year, Blake Taylor closed a $3.4 million deal he’d thought would be impossible. “I thought it was priced too high at first, but it worked out that we finally got the asking price.” The process took months of soliciting offers and going back and forth with potential buyers. As Taylor, the owner of Synergy Business Brokers in New Rochelle, explains, “The key to that deal was patience. The first few offers were too low, so we had to have stick-to-itiveness.”
You may not be working on multi-million-dollar deals very often, but it’s a given if you’re in business that you negotiate something every day—maybe every hour. Trying to land a contract with a new client? There will probably be some give and take on terms. Proposing to sell your services? Your customer may have a different idea about their worth than you do. Hiring a new employee? Even after the salary is set, there are myriad details that need approval by both of you. Depending on the circumstances, you could also be on the opposite side of every one of those transactions.
“Any time two people come at something with different ideas, negotiation is involved,” says Eric Marks, principal of Business Advisory Services and HR Consulting at Marks Paneth in Tarrytown. Customers, landlords, tenants, vendors, employees, partners—the better your negotiation skills, the stronger and more successful your relationships with them will be. “A successful negotiation is where both parties come away happy,” Taylor says. “They may not be happy with everything, but overall each party got the main things that they wanted.”
Attorney Josh Meyer of Pannone Lopes Devereaux & West, LLC, in White Plains pretty much specializes in negotiation and says it doesn’t have to be painful or antagonistic. In fact, he advises, “You want to create the win-win whenever you can because you want the deal to work for the long term. If you push too much, things can fall apart later.” His firm handles projects such as requests for proposals and lease negotiations for Nassau Coliseum.
So how do you negotiate transactions in which both parties win?
Knowledge is power
Start by knowing what everybody at the table really wants—including yourself. “You really have to decide what’s important to you,” Marks says. “What will you walk away from? If I know what I’m trying to accomplish and know how flexible I am, I can listen clearly because I
don’t have to think about my own position while the other person is talking. I can avoid defensiveness and other negative reactions that can derail my ability to communicate clearly.”
It’s very possible that the things you want involve matters other than mere price. Payment terms, working conditions, delivery dates, exclusivity, length of the agreement, renewal options—the list of potential deal points is virtually endless. You should know which ones matter to you before you start negotiating.
“Price is price a lot of times,” says Daniele Churchill, partner in boutique Churchills of Mount Kisco. “You try to control other things like where [products] are sold. I like to know who else is selling a line of merchandise before I bring it into my store, for example. I need to know how far away they are from me because I have overlapping clients with some of my competitors.” In addition, she says, “Delivery has to be on our terms, too. We specifically state when we want things shipped to us because timing of when things hit the store is very important.”
You also need to know as much as possible about the other party in the negotiation, too. “The biggest mistake most negotiators make,” Meyer says, “is not doing their homework on the entity with whom they’re negotiating.”
Homework isn’t the only way to learn about someone. “It’s helpful to ask questions to draw out information, not just ask ‘yes or no’ questions,” Marks advises.
Then, close your mouth and open your ears! “You have to have good listening skills,” Taylor explains. “You have to uncover what’s important to the other party.” It’s axiomatic that you can’t listen while you’re talking, so don’t be afraid to let the other person get a word in every once in a while.
Start from reasonable positions
Many people think the best way to start a negotiation is to name an extreme price just to see if the other party jumps at it. Marks, however, recommends against that tactic. “You want to start out a relationship based on ethics, respect, and credibility, so the last thing you want to do is start with a lowball offer,” he says. That’s especially true in employment situations. “You should set a salary for a position that you would give to anyone with the same qualifications. If you need to offer less because the applicant doesn’t have all the qualifications, tell them that,” says Marks.
Taylor agrees there are dangers in aggressive asking prices. “It’s not good to have the opening price so high you don’t get any interest,” he explains. “The flip side is setting it so low you leave money on the table. Buyers can also make such a low offer that the seller won’t take them seriously. It turns them off.”
It’s also helpful to explain why you’re making a given offer rather than just putting it out there to see if you get a bite. Giving a rationale for your price makes it easier for the buyer (or seller) to accept it as reasonable and helps remove that “rug merchant” aura that surrounds haggling. No one likes to think they’re making a deal that could be better if they just bargained a little harder.
Emmy-winning freelance TV videographer, editor, and producer Lew Stiefel of Dobbs Ferry faces fee negotiations almost daily. His strategy is open and straightforward. “I need to educate the client about what it takes to produce something so they see how much time and equipment is involved in their job. Hopefully, they then increase the budget so it works.” While he sometimes engages in some give-and-take, he’s found the process not necessarily the best way to go. “The first thing I ask is what they want from the job, then I ask them what budget they have. If I can work within the budget, I go ahead. If not, I generally wish them good luck and move on.”
It’s a process
Once the deal points are on the table, the real back-and-forth begins. Taylor suggests taking your time and not rushing to judgment. “Uncertainty is very uncomfortable for people, so they try to get rid of it rapidly by saying ‘no,’ but the reality is you have to take baby steps first. Never say ‘no,’ always say ‘maybe.’” Taylor is usually in the middle, conveying offers from the prospective buyer to his client, the seller. “I just keep trying to move the ball forward. If someone says the offer is too low, I ask what works for them. I try to get each person to give a little until we find a resolution.”
The real deal killer is often not the terms, but the emotions of one or more of the parties involved. “I always try to get people to relax,” Taylor says. “Emotions can run high and you have to remember that this is just business—it’s not personal.”
Understanding what’s going on internally can help you deal with your emotions, according to Marks. “We can’t stop ourselves from feeling the way we feel when someone makes an offer,” he says. “But there is a moment in time between the reaction and when we act that we can be self-aware. If we feel defensive, for example, we have to put that aside and respond in a way that’s professional, balanced, and under control.”
Meyer agrees 100 percent. “Emotions and ego can ruin deals,” he says. “You must maintain your composure or deals will fall apart. Of course you have contentious times in negotiations, but you have to remember that everybody is human and you want to be able to walk away from the table at the end able to shake hands with each other.”
Setting your goals and doing your homework are two important ways to get better at negotiation. Marks suggests adding a third technique—rehearsal. “Practicing negotiation isn’t a bad idea,” he says. “Get somebody you trust or even do it alone in front of the mirror. Ask yourself tough questions that might come up and make sure you understand your answers. The better prepared you are, the more confidence you will have.”
“The more negotiation you do, the better you will get at it,” Meyer adds. “People negotiate all day long in ways they may not even recognize as negotiation. Everybody has the ability.”
Veteran freelancer Dave Donelson also writes about negotiation skills in his book, The Dynamic Manager’s Guide to Creative Selling.