Be direct.  Don’t hint around at what you want or what you have to offer.  Make express affirmative statements that show you are standing firm in your position.  Statements that start with “well,…” or “what I was thinking…” and so forth will leave the other party with the impression that you are doubting the strength of your position. 

Instead, use phrases that emphasize your belief in your position; for example: “Here is what I am prepared to offer.” or “This is what I am capable of doing.”  Following those statements give your proposition, then stop and listen.  Make eye contact and examine the other party’s reaction.  Being straightforward also prevents you from giving away more information than the other side needs to know, which leads into our next point.

Don’t tell the other side more than they ask for or more than they need to know.  If they ask something that could weaken your position, just work around the question with something like, “that’s not what’s important here” or “let’s try to stay on task and see if we can reach an agreement.” 

In the above two strategies some may think you risk coming across as being too rigid.  Certainly you can take anything to an extreme, such as combining the above direct authoritative statements with the use of a harsh tone, gestures (such as aggressively pointing or pounding your fist on the table), or by just being rude (interrupting someone is one of the fastest ways to send a negotiation process into a tailspin). 

Being direct while still being professional and calm is actually more respectful as you spend more time listening and only stating the relevant facts to your side.  You essentially take the emotions out of the deal.  The emotions are what usually kill a deal or cause someone to give away too much and “lose the deal.”  Remember that saying from my friend, the car salesman, “a good deal is a state of mind.”  If you lose your cool and end up paying more for something than you originally wanted, this could cause you to feel buyer’s remorse or that you were cheated.

Don’t respond too quickly to the other side’s proposal.  Shooting from the hip or responding off the cuff makes you look anxious and likely to forget something you wanted to add or even confuse you about where the offer currently stands relative to where you want to be.  The easiest way to slow things down is to write them down.  As the other person is talking, jot down some of their points, especially the points that you wish to challenge. 

If the other party is handing you something in writing while you verbally discuss the deal, go through the document and circle things or write notes in the margin.  As a courtesy ask the other party if you can make notes on the document.  If the document was intended to be the final draft of your deal you wouldn’t want your personal notes about the “airhead” sitting across from you to show up in the margins!

Don’t go backwards in the negotiation.  Once a particular part of the deal is done, move on and focus on the remaining details.  Don’t let the other party try to make changes to the portion of the deal that’s already been done.  If the other side tries to change something that’s already been agreed upon, reply back with “we already agreed on x number of units, we now need to determine when they will be delivered and who is responsible for insuring the shipment.”  

Reminding the other party of the remaining concerns helps keep the negotiations moving forward rather than continually going over the same parts that were already discussed.  These kinds of statements should be reserved for when the other party is trying to go back and change things.  You shouldn’t continually say what is left for negotiation as you make progress.  No one likes a narrator during negotiations.  Rather, this type of response is exclusively used when the other party is backtracking.

Stick to your walk away price and terms.  Car salespeople are excellent at getting people to come up higher than where they want to be.  If someone says $19,000 is the most they want to pay for a car you can almost bet the salesman is trying for $19,500.  Usually they will do something with the financing like saying, well it’s only an extra $26 per month on the payments and then describe all the nice features on the car again. 

The bottom line is that your walk away price should be just that.  John F. Kennedy once said, “We cannot negotiate with those who say ‘What’s mine is mine and what’s yours is negotiable.’”  If the other party won’t come to terms with you and you’re at the walk away price, it’s time to walk away.

Now it’s time to hear from you.  Regardless whether your negotiation experience was buying a car or a multi million-dollar acquisition, we would like to hear your thoughts on what you do during the actual negotiation.  Feel free to leave comments and feedback to this article as you see fit.

Thomas Goodwin is an Ohio licensed real estate agent (Realtor) and insurance agent.  He is the Founder and CEO of Northern Pine Properties, Inc., a real estate investment, development, and management company in Cincinnati, Ohio.

Prior to going into a negotiation meeting each side knows that they have a starting point and a walk away price.  We don’t usually say, “ok, I’m going in to this car dealership and I am going to buy that new SUV for $19,000.”  Neither side knows the final sale price or terms going into the negotiation.  We have that $19,000 as our starting price in our mind, but we know that to actually purchase the new SUV we will probably have to come up a little higher.  We start out low because we know the other party will never come back with less than where we start. 

Likewise if you’re selling the SUV you might think to yourself, “I would really like to get $28,000 for this vehicle, but if I had to I could let it go for $24,000.” 

Having a starting point and a walk away price helps us keep the negotiation in a framework that we can use to create a deal that is satisfactory to us.  This leads us into some principles of negotiation.

Let’s talk more about what to do prior to going to the actual negotiation.

Do your homework.  Identify the strengths in your position.  In our above example we said we had a beginning price in mind.  You should know why your starting price is what it is.  Have some reasons why you think the other side should concede on price or other terms.  Are there acceptable substitutes for their product in the market?  Is there a way to reach your ultimate goal without the other party’s product or service?  If you are the seller think just the opposite: what is it that brought them to purchase your product or service versus your competitor?

Rank your needs from those that you absolutely cannot concede all the way down to those that you are the most willing and able to concede.  This isn’t to say the least important things are those that you should start off with, nor should you just give them away.  But if you have to start bending a little from your position to get the other side to concede, it’s best if you have an idea of what you can do without and what kills the deal for you.

Take your position out for a practice run before the actual negotiation.  You could have a business partner, spouse, or friend play devil’s advocate with you.  Have your friend perform the role of the other party and see how he or she responds to your offer.  You will be more likely to see any flaws in your argument before the person helping you role-play will.  Use their reactions to gauge where you need to make changes in your argument. 

Think of other things you can bring to the table that the other party might not anticipate.  In our car example, as the buyer you could offer to take business cards, key chains, magnets, etc. to your friends and family.  Businesses that work on referrals are more accepting of incorporating future business into their current negotiations.  If you are involved in a group or organization and provide the other party with the ability to reach a larger audience by virtue of your sale, don’t hesitate to mention that when you present your offer.  Use your social influence on groups that you belong to as a way to negotiate a better deal for yourself.

I would love to hear from fellow entrepreneurs and especially people with sales experience about how they prepared for negotiations beforehand.  You can leave comments on this post or simply use the Contact form on this website to do so. 

My next post will be regarding the actual negotiation meeting, so if you have comments or experiences you wish to share about the actual negotiation taking place, please save those and post them in the next blog entry!

 Thomas Goodwin is an Ohio licensed real estate agent (Realtor) and insurance agent.  He is the Founder and CEO of Northern Pine Properties, Inc., a real estate investment, development, and management company in Cincinnati, Ohio.

A great idea alone will not make you successful. An idea is simply the first step in the task of converting your creativity into an opportunity. How do entrepreneurs transform a good insight into a marketable opportunity? These 5 steps can guide you through the process:

The 5-step Creative Process for Entrepreneurs

• Preparation � After coming up with a great idea, let the left side of your brain do some information gathering. The left side of your brain is analytical, objective and rational. Use it to examine and collect information related to the idea.
• Mastication � Mastication is the act of chewing. Once enough general information has been gathered, let the right side of your brain “chew” on the idea. The right side of your brain is intuitive and subjective; it will approach the idea from a holistic perspective and find synergies you never realized.
• Incubation � Walk away from the idea. This may seem counter-intuitive, but in actuality you are way too close to the idea after the first two steps. It is important to back away from the idea and let it incubate and mature in your mind at a subconscious level. The best way to do this is to engage yourself in an activity that allows you to lose track of time (e.g. exercising, playing video games, etc.).
• Illumination � Most great inventor/entrepreneur success stories begin their tale at this step � when the proverbial “light bulb” turns on. This “Eureka!” moment is the culmination of the preparation, mastication and incubation steps. At the point of illumination, the synergized idea bursts out of subconscious incubation and into your conscious mind � usually when least expected.
• Commercialization � Some may say this is the easy part, others might tell you that the real work starts here. Commercializing your idea is the last step in its transformation into an opportunity. In this step you are smoothing the edges of the idea and developing a model for monetization. Who will pay for it? How will you manufacture it? Where should you position it in the market?

Attribution:

• New Venture Creation (Timmons & Spinelli)
• John Schuyler: 5-Steps in the Creative Process

Kawasaki believes the essense of entrepreneurship is about making meaning; changing the world in a positive way should be the core of any new start up. In The Art of the Start, he defines four ways to create meaning:

• Make the world a better place
• Increase the quality of life
• Right a terrible wrong
• Prevent the end of something good

“If you make meaning, you will probably make money. But if you set out ot make money, you will probably not make meaning and you will not make money.”

Does your business strive towards one of these four goals? Seeking meaning shifts your focus away from money, power, prestige and all of the other temporal results of starting a company and instead focuses it on changing the world in a positive way. Will people 200 years from now still benefit from the things your company does today? Set out to create genuine meaning and they just might.

You can watch Kawasaki speak more on this topic and others at the Stanford Technology Ventures Program website.

1. Retirement businesses: Millions of baby boomers will soon retire. Most boomers are still too energetic and engaged to just golf or garden. Others need income but can’t find jobs. Boomer retirees will start businesses in record numbers.
2. Continuing rapid pace of change: Change — rapid change — is now a business constant. One participant in our future-predicting panel referred to this as “permanent whitewater” — the world around us is always swirling.
3. Rising health-care costs: Health care will continue to be an ever-increasing expense, rising disproportionately to other costs. This will dampen both individual business growth and new business formation.
4. Entrepreneurship education: Look for younger and better business owners in the years to come. Students are flocking to entrepreneurship classes and programs in college, and teaching kids how to run businesses starts as early as elementary school. Also, there’s a new field of small-business management.
5. Immigrant entrepreneurs: Immigrants have always been a tremendous force for creating new businesses in the U.S., and their numbers will keep expanding. These businesses will be in all industries and level of complexity — not just the corner store or the new computer company.
6. Reluctant entrepreneurs: Finally, as jobs in large corporations continue to be eliminated or sent offshore, many people who would rather have a job will be forced to start businesses just to survive.

In the full article, Small Businesses Can Make Change Work For Them, Rhonda also provides tips for harnessing the potiential of these trends.

The last three trends suggest that entrepreneurship is becoming a preferred (often required) career path for younger generations. Magazine covers and front page stories blast us daily with a seemingly endless stream of overnight millionaires. Envy is producing a market for turn-key systems that flatten the learning curve for entrepreneurial business ventures. Teach people how to play the part of entrepreneur and you will find a profitable niche.

When you think small business, think 1-10 people not 50-100. There’s an endless supply of 1-10 person companies. Who cares about the Fortune 500? It’s time to care about the Fortune 5,000,000. Forget the enterprise market. Forget the mid-sized company market. Build for the smallest of small companies and you’ll find a thirsty, neglected market waiting for you.

Think long and hard about your target market. Read more about Side-Business Software: The neglected software market

Reading a business magazine in the doctor’s office inspired Joseph Tantillo to try his hand at online retailing. At the time, he and his wife were expecting their first child and wanted to work from home. An article about starting an online store jumped out at him, he recalls—and, as a member of a fraternity in college, he decided to sell personalized Greek apparel to that market.

…

Using the strong Greek network worked, as he’s built GreekGear.com’s yearly sales to $1.9 million.

Read the full post about GreekGear.

1. Seek transparency and understanding with your partners early. Issues get harder as time passes

2. Startup founders work long hours for a reason. There’s more work than there are people. If you’re seeking balance, seek it elsewhere.

3. Bad customers will drain you of passion. Really bad customers will drain you of both passion and profits. Unfortunately, most bad customers will degenerate into really bad customers if you don’t do something about it.

4. If you’re changing directions too often, worry a little. If you’re changing people too often, worry a lot.

5. It’s lonely at the top, but even lonelier at the bottom. In the early days of a startup, hardly anyone wants to talk to you (except some desperate vendors).

Read the full list of insights.