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principled negotiation
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You can't always get...

Monday, 16 August 2010

The majority of people seem either to have a absolute love of, or an absolute horror of, negotiation - rarely do I come across people who have a ‘take it or leave it attitude’. In fact, the vast majority fall in to the ‘horror’ camp.

However, negotiation is incredibly tough to avoid, sometimes we negotiate without even thinking about it, and, particularly in setting up a new business, it is essential. In this chapter of the story of the launch of a new small business - where we can draw lessons regardless of where we work - I’m going to look at some of the negotiations that had to take place.

As it’s been a while since the last chapter was published, you my want to catch up with the story so far here (articles on the introduction, business planning, and going it alone):

small business start-up

business planning

doing it yourself or buying in expertise

Moving the story on to the next phase, there were an number of areas that needed to be negotiated well to give NewCo the best possible chance of success. How did these go?

We got what we wanted...

As part of the planning process, the entrepreneur behind the new business had drafted some outline financial plans. A significant part of this was a plan to steadily improve the gross margin of the business (and to allow her to spend time doing what she really loves) by getting into production as well as retailing from the main site. In order to do this, she needed access to some space, preferably a building, in order to undertake the production.

As part of the meeting, this need was outlined clearly, built into the large-scale objectives, and was pretty ‘general’ - in the sense that no specific solution was proposed, but the need was clearly identified.

The outcome was better than could possibly have been predicted - a site, with a building, was offered for no extra rent; resources would be provided by the landlord to bring the building up to standard; and very few (and no serious) limitations were put on its use.

...but you can’t always get what you want...

This being the real world, not everything was that straightforward though. As part of the planning for the detailed meeting with the landlord, and as part of the financial planning, certain objectives were set for the level of rent, how many months of the year it would be paid (it’s a very seasonal business), and what the upfront ‘free period’ would be - six months was wanted, to help with cashflow in the early days.

The entrepreneur didn’t get what she wanted. The overall rent level was fine, but she ended up with only half the ‘free period’ she wanted, and rent was due in advance, not in arrears as had been hoped.


There are a number of lessons that were learnt and are useful reminders to help with those times when we have to enter negotiations - these are the crucial ones I picked up during the process:

Don’t be (too) specific

It is far, far easier for people to say no to specifics than to generalisations. The first example above outlined a situation and a need, and left the landlord to offer solutions. The second example was specific about the detail of what was wanted. The former succeeded and the latter failed. Enrolling people into your world and your needs - and allowing them to help - can be much more powerful than telling people what you want.

This example is a great one, because more was offered than would have been asked for, the solution was different, but better, than what had been imagined, and, because it was the other party’s idea, they are still enrolled in making it a success.

Don’t be (too) self-centred

Negotiation is about getting what you want, but in no way is it all about you - if it was, you wouldn’t have to talk to anyone else at all. One of the first steps really has to be understanding, and genuinely appreciating, the situation from the other party’s point of view. You ned there help, you need their support, so you need to make the effort to understand them.

In the example above, the first (successful) part of the negotiation worked as well as it did simply because there were reasons why the outcome worked for the other party. Because the need was expressed openly, they could openly create something (without the entrepreneur having to second-guess) that worked for them, as well as meeting the entrepreneur’s need.

Don’t be (too) hard on yourself

Setting yourself tough, challenging objectives when entering a negotiation is the right thing to do - it’s the old cliche about shooting for the stars so you at least get to the moon. However, do remember that you were really wanting the moon - don’t be disappointed when you don’t actually get the stars! They were only there as a driver and energiser, never as a real target.


What are your best, and worst (!) examples of negotiation?

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It costs you nothing, and (possibly) helps us spread the word!