A good dealmaker has a way about them…
Imagine not being aware of how certain negotiation techniques are being used against you or how your response in those situations hurts you…
Now throw in the idea of having a negative vision of your counterpart and the idea that you’re dead set against making any concessions…
Finally, how much pressure would you be under if you had no alternative to making this business deal, that it just had to get done no matter what…
Can you imagine what your state of mind would be?
You’d probably be a train wreck! Your chances of negotiating a good deal would be similar to a snowball’s chances in Arizona in July!
Does that sound like a skilled dealmaker to you? You’d be surprised how many business owners get themselves into exactly that situation!
That’s why getting your mindset right before every negotiation is so important. In this post we’re going to cover four concepts when it comes to getting a dealmaker mindset.
Those concepts are: awareness; your view of the other person; your attitude about making concessions; and your alternatives to making a deal.
Dealmaker know thyself
The first piece to managing your mindset has to do with awareness. Being aware of the negotiation technique that’s being used against you, how that tool is designed to work, and how you’re responding to it is incredibly important.
Your state of mind in a negotiation is very important because negotiating isn’t personal – it’s business. Yet people ask me, if negotiating isn’t personal why do so many people make it that way? And the answer is that we’re emotional creatures and you use the tools that work. Emotional people can be moved to take action and make mistakes.
If I’m negotiating with you there are times that I may not want you thinking rationally and certain negotiation techniques can be used to affect your state of mind and keep you from thinking clearly if you don’t have very good negotiation skills.
The fun part is that by becoming more knowledgeable about these negotiation techniques you’ll frustrate a lot of people because you’ll be able to defend against the tactics they use. When you come across an inexperienced or untrained negotiator and their tactics don’t work on you, they’re really going to find that frustrating.
Skilled dealmakers will respect that you know how to handle yourself.
In sports you often hear a coach tell their player that if they want to fix their game then they need to get out of their own head. Sometimes negotiating is no different. People who allow themselves to be affected emotionally by negotiation techniques tend to fail or negotiate bad deals far more often than people who can remind themselves that negotiating isn’t personal, it’s just part of business.
Many negotiation techniques are designed to trigger emotions. A bad dealmaker let’s their emotions override what their mind knows is the right thing to do.
There will be times when you’ll need to pause and ‘get out of your own head’ for minute to get yourself refocused. Skilled dealmakers recognize when the emotions get triggered and they’re able to regain control of themselves.
How do you spot those times? It’s most often when you find yourself getting upset, frustrated, or raising your voice. If you feel that way during a negotiation and the other guy is calm, cool, and collected that’s when you know you’re being worked over. When you stay self-aware that’s much easier to spot.
This is the best time to take a break from the negotiation. You can break for minutes, hours, or even days.
Don’t waste the pause. This is when you should be reviewing your notes about what’s been said and what each party’s position is. Use the time to decide on your next move or create new options for yourself.
Keep Your Friends Close and Your Counterparts Closer
The second issue that influences your state of mind has to do with how you think of the person you’re negotiating with.
It’s important to remember that in many of your deals you’re going to work with the person or company after the deal is done so you can’t afford to foster negative feelings or a lack of respect for them during your negotiation. If you do, it’ll hurt your working relationship in the future.
You’ll notice throughout this post that I’ve chosen the word “counterpart” to name the person you’re negotiating with. I’ve choses this word because it supports maintaining respect for the person you’re negotiating with even though you’re going to use negotiation techniques that will affect them personally and emotionally.
I’m not saying that your counterpart has to be your best friend, but I want to encourage you to remember that somehow, some way, they’ve earned the right to be negotiating with you whether you agree with it or not.
Looking down on your counterpart is full of danger. Sometimes if we let ourselves think we’re better than our counterpart in a negotiation that could mean that we miss a clue or a signal. Missing clues or signals can cost you time, money, or both.
If you want to get a feel for what I’m talking about watch the movie The Score. In it Edward Norton plays a character who pretends to be mentally challenged. Everyone overlooks him because they don’t see him as a threat and this turns out to be a huge mistake.
The danger of overconfidence can be very expensive. If we start pigeon-holing people or ideas, our minds become closed. In every negotiation you need to have an open mind so that you can see where your counterpart is going and hear what they’re saying.
You need to be able to see the possibilities.
The safe starting point is to assume that your counterpart is skilled and savvy until you have what you want and there’s ink on the contract.
Negotiating is About Targeted Trading
The third concept that affects your mindset is your attitude about the idea making concessions. I’ve met many people who approach a negotiation with the idea that they’re not going to make any concessions at all, ever.
And the thing that’s funny about that…
If you could have had everything you wanted in your wildest dreams at your price and terms to begin with, there wouldn’t have been a need to negotiate. The very concept of negotiating means that both parties will be making concessions.
Think about this for a moment…
In any long lasting successful relationship that you’ve had, hasn’t there been some give-and-take? A successful negotiation is no different…
If you’re simply demanding and not making some concessions then you might as well be buying stuff off the shelf. I’ve had more than one friend in the venture capital world tell me that more deals have been killed by greed than anything else.
That being said, there are situations where you don’t need to make very many concessions, and sometimes you don’t have to give any ground at all. In fact I use a couple case studies in my negotiations training course to demonstrate when it’s useful to make no concessions.
It does happen, but you shouldn’t plan on it…
Often times in a negotiation you learn new information that changes the value of what you’re negotiating. Until ink is on the contract the price is subject to change. I’ve even been the buyer in negotiations where my purchase offer dropped 25% (over $10,000). It’s important to understand that doing something like that isn’t the same as not making a concession.
That’s not always going to be the case for every negotiation you’re in. Because of that, it’s important to realize that you may have to give something up. You’ll be making some concessions.
Got Alternatives?
The last thing that affects your mindset in a negotiation is your alternatives to negotiating the deal you’re working on at the moment.
For every deal that you’re trying to negotiate you should always know what your alternatives are to that deal before you make a deal.
Why are your alternatives so important? Two reasons…
The first reason is that at the end of the day the other guy may get stuck and not because of anything you did or didn’t do – and you might not be able to make a deal.
What do you do then?
A strategy that has only one path is an incomplete strategy. You need to know where you’re going to pivot and where you’re going to step if this deal falls through.
Knowing your alternatives can give you peace of mind. Trying to figure out your pivot under pressure can be very uncomfortable.
When I say “know your alternatives”, I’m not talking about having a simple mental list. You’ll want to write down the list of your alternatives to every deal you’re negotiating.
Rank them and add some color to them. Put a few sentences down on paper about how you might pursue those alternatives.
The bigger the deal, the more important this concept is. The reason I suggest that you write down a few sentences is so that you put a little thought into each of them. Having some alternatives in mind with some color to them will help you to relax when you’re in a negotiation. It may also help you throw out bad ideas before they have the chance to become your only alternative.
And that will help your confidence.
The list doesn’t have to be infinitely long. It can be just three or four ideas that you might be willing to pursue if you can’t make a deal.
For example: If you’re talking about buying a car then your alternatives might be buying from another dealer, buying a different brand, taking the bus, or sending your old car to the shop and having some work done on it so you can drive it for another year.
If you’re negotiating with a supplier, know who their competition is. Take this a step further and talk to that competitor so you have an idea about they’d be willing to do for you.
I’m not going to guarantee that you’ll like the alternates, but knowing what’s available helps you understand where you’re going, and it helps with your creativity.
That brings us to the second reason you want to know your alternatives.
How do your alternatives play into your thought process during a negotiation? The more choices you have in a negotiation the better you’ll do if your counterpart tries to corner you or pushes you to a deadlock.
Let’s take a look at your best alternative.
If your best alternative is unacceptable to you then you’ll likely work very hard to make a deal in this negotiation. You may be willing to give up a little more than you initially planned if your best alternative is a money loser.
How about your worst alternative?
If your worst alternative is easy to accept and has a good chance of happening then you may not be willing to give up much in the negotiation. You might play a little tougher with your counterpart.
Whether you like them or not, know what your alternatives are. Alternatives help with your confidence, creativity, and strategy.
There’s one more step.
You’re not the only one with choices
If you really want to take your negotiation skills to the next level, this will do it…
Just like you did for yourself, you need to list out your counterpart’s alternatives to making a deal.
One of the hallmarks of a failed negotiation is that one of the two parties let their assumptions about the other side’s situation affect their thinking. Don’t limit yourself here. There’s a tendency to think that your counterpart has to go with you, and that may not be true.
You need to be open to some new possibilities when thinking about your counterpart’s position. I’ve seen people do things that didn’t make any sense to me at all at the time. Be open-minded in this exercise.
If you know what your counterpart’s alternatives are to the deal it might help you better understand why they’re making certain concessions during the negotiation. More importantly it might also help you figure out how to value the concessions they’re asking you to make.
Knowing what the other guy thinks is important is incredibly valuable to you!
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