The art of negotiation, to me, has always been reminiscent and comparable to the game of chess. The thrill of making your move, anticipating your counterpart’s next move and all the while keeping your end goal in sight and your strategy intact is what successful entrepreneurs experience every day.
Learning to master the art of negotiation takes time to understand, requires mistakes to learn from and demands hours of practice. The ability to secure a good deal is crucial to running a successful business. It affects all parts of your business journey - from seed to multinational organisation, and all parts of your business day - from haggling for a discount on your stationery order to negotiating a smaller equity stake to give away in exchange for funding and investment. Where should you begin?
Keep your cool
Whatever stage in business life you may be in - a young entrepreneur looking for start-up funding, a senior executive looking to acquire another company, or somewhere in between - you will always encounter those with more experience that you. You will experience heated exchanges, intimidation from bigger and more powerful opponents, and you will often become frustrated when negotiations do not go your way. Keep your cool. The more you practice negotiating the more confident you will become. Years of experience in negotiating certainly help to get what you want out of a deal but it isn’t the only factor to consider.
Learn to speak more than one language
I don't mean that you must add French, German and Spanish to your linguistic repertoire. I mean you should get to grips with the language of the industry, the business and the other party. For example, equity valuations are notorious for containing more acronyms that words, so before you pitch your tech company for an IPO, understand what EPS, P/E ratios and FCF means. Being able to speak the same technical language as the person you are making a deal with demonstrates strong business acumen, sound grasp of the industry and most importantly, increases your counterpart’s sense of affinity with you. All of these factors increase the likelihood of a deal being reached.
The Human Factor
In business, there will always be unknowns and several moving parts. Allowing yourself to be influenced by fear, anxiety or intimidation will cause you to ignore your instincts, overthink decisions, and ultimately miss out on opportunities. Similarly, becoming over-attached to the subject matter of the deal could lead to you being talked into a decision, or continuing with a project that doesn’t make financial sense. Both scenarios can be avoided by taking a step back, emotionally detaching from the situation, and focusing on the numbers. If they add up, make a move, if they don’t, cut the cord and focus your energy on orchestrating new opportunities that will work for you. Learn to always hold your negotiating stance and bargaining position, even through the emotional rollercoaster ride that accompanies being an entrepreneur.
There isn’t a rule book on how to make a deal. There are no set parameters and the most successful entrepreneurs tend to have a creative streak in them which has helped transliterate an idea into a business plan. If you meet obstacles, think outside the box and look for a way around them. Something which is extremely important when entering into the business world and negotiation is a positive mindset. Positivity is contagious and looking at setbacks and hurdles as puzzles with solutions, rather than insurmountable flaws in your business plan, can help to get those creative juices flowing.
Embrace unsuccessful negotiations
Every entrepreneur will have failed at least once, and more than likely several times, to get what they want out of a negotiation. Don't concentrate on feelings of disheartenment or failure - try instead to view each negotiation as a competition with yourself. At the end of each deal assess how well you did compared to last time, what you can learn from, and where there’s an opportunity to improve so you can beat your own personal best during your next set of negotiations.
Time well spent
Choosing not to invest your time in learning how to be a deal-maker, could end up being a deal-breaker for your entrepreneurial pursuits. Ultimately, successful negotiation really does rely on your ability to keep your cool. Concentrate on making decisions analytically rather than emotively, being confident in your business acumen when you’re lacking in experience, viewing mistakes as an opportunity for improvement rather than admittance of failure, and remaining composed during negotiations by competing with yourself rather than others. As you begin to master these skills, you will start to become familiar with the chequered board of business negotiation and will be well on your way to victory. Check mate.