Chapter 10. Building your business
A wealth person is simply some one who
has learned how to make money
when they’re not working. — Robert T. Kiyosaki
I am often seen as a tough negotiator.
That may not be a bad reputation people are sure
I will ask for large sums of money
but I prefer to see myself as an effective negotiator rather than a tough guy.
I actually take more pride in my selling ability than in my negotiating skills,
because it is more difficult to get customers
to want to buy than to determine their terms of purchase.
In fact, I often view negotiation as the final step of a sales effort,
the culmination of a process
that may have taken months or more.
When the time comes to negotiate,
some principles need to be applied.
WHAT, WHEN, WHERE, EXCLUSIVE AND WHAT?
If you really want to do something,
you’ll find a way.
If you don’t,
you’ll find an excuse. ― Jim Rohn
All five questions above must be answered in the negotiation.
Each sentence can be expanded,
narrowed or balanced depending on the situation of the negotiation.
Even in the case of real estate negotiations,
you may not need to ask all five of these questions,
but it’s still a good idea to go through the list.
It can open up solutions
that you didn’t expect at the start of the negotiation
(instead of buying your house, I’ll rent it out for 99 years).
What exactly are you selling?
For celebrities, it’s two things: their name and their time.
But this still doesn’t answer the “what” question.
What rights do you sell over the use of your name
and time and what is the purpose of selling those things?
This also means how long,
from one business day, to “forever”.
“Territory” is a good location for multinational
and multi-regional deals and contracts.
For example, we have many television publications licensed in hundreds of territories,
some of which are defined by national borders,
others by a common language.
Because of the territorial aspect of our negotiations,
we maintain multiple headquarters around the world,
leaving us far behind our competitors.
How is exclusivity?
We find this an attractive negotiating aspect.
To what extent do customers want (and are we willing) to keep out competitors?
This can mean a product monopoly,
an industry-wide monopoly,
a territorial monopoly,
a favorable start monopoly.
Every issue is attractive
when related to other aspects of the negotiation.
What’s the price?
This means money
but not just money.
It can be stocks, shares
or other forms of capital.
For us, it usually means “how much time”.
Time is the most valuable thing a professional athlete has.
It takes them a certain amount of time to practice or compete.
Because time is something
that cannot be manufactured or stretched,
we must be very attentive to the “personal time”
that athletes commit to their clients.
DON’T WORRY ABOUT PRICE, ADD MORE YOUR QUALITY SERVICE
Don’t be discouraged.
It’s often the last key in the bunch
that opens the lock. — Cherry Nguyen
This always reminds me of the “battery method” in team selection:
Halfway through the first half,
suddenly you know what the outcome of the game will be.
When one side offers 20,
the other side 10,
and you end up with 15,
it’s not a negotiation,
it’s a compromise.
In addition, it is possible
that neither side will be satisfied with the price of 15
and both will feel at a loss if they have to accept the lower price.
Don’t solve problems by numbers alone.
Negotiations are more complex
and need to be more delicate.
The number is just one part
which is neither larger nor smaller
than the other pieces of a negotiation pie.
BIG COMPANY DOESN’T MEAN MANY MONEY
If you can’t yet do great things,
do small things in a great way. ― Napoleon Hill
The bigger the company,
the more money it needs to spend.
In theory this is true,
but in practice it is almost always the opposite.
The larger the company,
the more divisions it has,
which means a variety of budgets are needed to meet the needs.
I’ve seen a multi-million dollar commitment made by a mid-sized company
and also seen one of the largest companies in the US take six different decisions
from six divisions to approve a cost of $50,000.
LET THE PARTNER SAY FIRST, LISTEN THEN UNDERSTAND WHAT THEY WANT
If you fell down yesterday,
stand up today. ― H.G. Wells
Usually, it is advisable to let the partner set the terms and the price first.
That helps you know what your partner is thinking.
And in many cases,
the partner’s first offer is higher than
what I thought it would be.
Sometimes you can get a partner’s price
by asking hypothetical questions based on other conditions:
“If you do this and we do that,
how much will we charge?”
“Suppose we add this and add that?”
“Suppose if you had to put a price on it…?”
HINTS FOR THINKING, FOCUS ON WHAT THEY WANT, WE CAN DO FOR THEM
Some people dream of success,
While others wake up
and work hard at it. — Mark Zuckerberg
When it comes to terms or prices,
it’s a good idea to reiterate similar agreements you’ve made
before as a basis for discussion,
even though those are the best terms you’d like:
we sold ‘X’ to company ‘Y’ and we got ‘Z dollars’”.
There are no inherent challenges in this approach.
It makes your point without putting the other side on the defensive
and it makes him think of what higher price.
DON’T NEGOTIATE WITH FULL NUMBERS
Everything seems simpler from a distance. ― Gail Tsukiyama
The round number often makes people want to negotiate
and also often gives another round number.
Odd numbers sound harder, more certain,
and harder to negotiate.
I don’t like to hear the “one hundred thousand dollars” price offered in the negotiation.
Those are some of the easiest to negotiate in the world.
Give the number $95,000 or $104,500.
This way you will achieve better results.
NEGOTIATION WITH STRONG PSYCHOLOGICAL
Sell best your self. — Cherry Nguyen
For many years,
we have used psychological negotiation on the surface
this is a normal form of negotiation
but actually has a very strong psychological impact.
This is a great form of negotiation
because the other side rarely understands its true power.
In many cases,
it has helped us break through deadlocks in negotiations
giving our partners exactly
what they want without letting them know we are getting more out of it.
The first case was
when we negotiated with Slazenger in Australia
about the length of the equipment contract for Gary Player.
Slazenger just wanted to sign a short-term contract.
We don’t like this, because if this doesn’t work,
Gary will lose his image in Australia.
But Slazenger remained adamant about his intentions
until we came up with an “Australian termination clause”:
The contract could be terminated by either party
from the time it was signed
but with prior year notice.
My provision means that Slazenger may reluctantly terminate a contract with
whom they will remain personally associated
but remain financially committed for the following five years,
thus, they I will do my best to make sure this never happens.
So far, Gary’s contract with Slazenger has entered its 20th year.
In the late 1960s, we encountered a similar impasse with All State
and Arnold Palmer life insurance companies in concluding the term of the policy.
We wanted to sign a 15-year contract,
and Juson Branch, the CEO of All State at the time,
didn’t object, but was retiring
so he didn’t want to burden his successor with a long-term contract.
Therefore, he was determined to only sign a three-year contract
and could extend it further.
This made me feel very nervous
because I knew the new CEO of the company
and he certainly wouldn’t share the “light” with Arnold.
He would certainly never renew his contract if he could.
Finally, we entered into a 15-year contract,
which could be terminated after three years on the condition
that some penalty was paid, and importantly,
the penalty amount would be greater than the annual upfront fee.
This type of clause offers two benefits.
Firstly, not renewing the contract may not make the partner feel difficult,
but it will cause psychological problems
when having to meet and tell Arnold:
“We want to terminate your contract”.
Second, even if All State decides to terminate the contract,
we can still convince them and extend it for another year
(and then another year, another year, and another year),
as long as the penalty ends contract is always higher than the annual upfront fee.
Contracts can still be continued for many years even under new CEOs.
AVOID COMPETITIVE, DO IT SIMPLE, BENEFICIAL TO BOTH PARTIES
Find out what you like doing best,
and get someone to pay you for doing it. — Katharine Whitehorn
Sometimes, negotiation becomes complicated with dominating,
dominating things, as if our
whole purpose is to get the opponent to accept and give way first.
The purpose of negotiation is to reach an agreement
that is beneficial to both parties.
If you turn it into ego competition,
it can have a big impact on you.
Avoid words like “Break the deal,”
“Take or leave,”
or “That’s not negotiable,”
or anything that seems to challenge the other person to compete with you.
Do not raise controversial issues,
issues that have only indirect connection
or have no meaning to the negotiation.
These problems are often the result of egos being too big:
“Then you can’t do this”
or “Then we’ll drop that.”
In many cases,
these issues can become negotiating points
the things that win us over.
If opportunity doesn’t knock,
build a door. — Milton Berle
Calculating where the other party wants to end up is very helpful
at what point he wants to end the negotiation
so he feels like he has a stake in the deal.
This is different from “How far will he go?”
You can push your partner into a corner and reach an agreement,
but his resentment will always haunt you.
The best way to find out the “magic point” of a negotiation is to ask
We try to estimate the sale: “Given your connections,
how many products do you think you will sell?”
Usually, they will exaggerate the number a bit to impress you with their expertise.
But we can use this number to determine
what price they can accept,
and we can use their logic to back it up.
PUT YOURSELF IN THE PARTNER’S POSITION
Opportunities don’t happen,
you create them. — Chris Grosser
Putting yourself in your partner’s shoes is also an effective way to find the “magic point”.
As a partner, ask and answer for yourself
“What are the real limits of ‘me’?”,
“To what extent do ‘I’ need this agreement?”
“If negotiations fail, what other solutions will ‘I’ have?”
“When negotiating this,
will everyone in the company support ‘me’
or will ‘me’ always have to argue about it?”
“And what will ‘I’ have to do to make sure that doesn’t happen?”
When you do this, you can easily predict
where you will end up negotiating.
PLEASE PLEASE ADDITION: HOW TO USE “BUT” AND “HOWEVER”
The most important thing in life is
to love what you’re doing. — Donald J.Trump
Understand your partner’s feelings.
This is one of the most classic psychological techniques in the world,
and is effective in negotiation as well as in all human relationships.
At first glance,
this sounds like you have to accept or commit to something,
but the reality is that all you have to “accept” is how your partner feels.
The linking clause,
which helps you omit the beginning of a sentence,
is a powerful negotiating tool:
“Yes, but…”, “I know how you feel, but.. .”,
“I know exactly what you mean
and I can’t disagree with you, but…”
Those who are well versed in this technique can easily achieve all the negotiations.
DISTRACT WITH A QUESTION
Wanting to be someone else is a waste
of the person you are. — Kurt Cobain
If you don’t like what they say,
find a way to ask a question, even if it’s just,
“Why do you say that?”
It can cause your partner to take a closer look at your position,
and it will also make your feedback more agreeable,
and they’ll continue to talk more.
DON’T IGNORE THE PARTNER’S OPINION
A Business is simply an idea
to make other people’s lives better. — Richard Branson(Virgin)
During many discussions,
my partner repeatedly presented ideas
and did not seem interested in my opinion.
In business relationships,
there’s nothing more boring
and potentially sabotaging major negotiations than getting the impression
you’re talking to someone who is hard of hearing.
Pretending to be deaf is a valuable art of negotiation,
and “I don’t understand” is a reasonable answer in negotiation.
But ignoring your partner’s point of view
or pretending not to hear
because you don’t want to hear will only bring more frustration.
Moreover, the more times the partner repeats his
or her point of view, the harder it becomes.
BRINGING OUR PARTNER’S PRIVATE BENEFITS
The future belongs to those
who believe in the beauty of their dreams. — Eleanor Roosevelt
Another effective negotiation technique is to make the negotiation easier
by doing things the other side is interested in.
It can be things that have little
or no connection to what is being negotiated.
For example, we promise to provide a partner
with tickets to the Olympics in a contract
that has nothing to do with the Olympics.
KEEP YOUR CONTRACT DURATION SECRET
Whatever you decide to do,
make sure it makes you happy. — Paulo Coelho
The pressure to reach an agreement causes you to say
or do things that are not in your favor.
Whether your deadlines are real and absolute (rarely),
or just wishful thinking or convenience,
don’t let your partner know.
If your partner knows you have a deadline,
they won’t need to know anything else.
On the contrary,
their deadline is one of the most important pieces of information
you need to have.
or the passage of time
is one of your valuable allies in negotiation.
Anxiety and the desire to reach an agreement are the sources of hasty behavior.
This state of mind makes you want to speed up the negotiation process.
You should control that mentality
and take advantage of it in your partner.
Every negotiation that is coming to an end always has a lot of issues
that need to be resolved.
Over the years,
I’ve made it a rule for myself to ask for an extension to the next day.
By the next day,
the partner often makes concessions on many important points.
The important thing is
that you don’t have to agree on every point
in order to reach an agreement.
We always have a sizable contract percentage on file,
identifying points of need for resolution
that could proceed with a deal.
The dream was always running ahead of me.
To catch up,
to live for a moment in unison with it,
that was the miracle. — Anias Nin
Negotiation is not always about sitting around the table.
In fact, most business problems
or disagreements are resolved by some form of negotiation.
The more informal the negotiation,
the more emotion plays a role.
The person who controls emotions in these disputes will be the winner.
Treat business disputes as the beginning of negotiations
When you look at conflict that way,
you’ll become wiser,
less likely to express your feelings
or desires to vent your anger,
and more focused on getting what you want.
Step back and relax
Use the emotional element to prevent emotional outbursts.
You can say anything
but random things you want to say.
Say: “Let me think about it” or “I’ll call you later.”
Treat negotiation like a game of winners
and losers and, in fact, it is.
Your partner’s anger is your opportunity
When the partner reacts first,
it means he has lost control.
Chances depend on how you react,
accepting restraint or reacting.
Act, not react in anger
Anger, and all other strong emotions, can be fair
Negotiation is effective but only a calculated action, not a response.
I saw a photo of Nikita Krushchev
during the historic shoe-smashing incident at the United Nations
and noticed that he was still wearing both shoes,
and only used another shoe to smash the table.
That is a calculation.
Honesty, when used correctly is one of the most powerful,
yet least used
When negotiations become extremely intense,
possibly spiraling out of control,
or in danger of failure, be honest:
“I really want this to go through”
or “This is really important to you.” I”.
Statements like these not only bring prospects to the negotiation,
but also make the other party trust you more.
which seemed insurmountable a few minutes ago,
began to unravel.
And a reconciliation,
which a few minutes ago seemed improbable,
could have been made.
Do you or your partner have the upper hand in the negotiation?
This is an important question you must ask yourself
before you begin a negotiation.
How far can you push the negotiation?
To what extent does the partner want to negotiate?
How does your partner rate your position?
However, each person has a way of seeing
and evaluating having advantages
and not having their own advantages.
The rules of the negotiation game are to say
and do things to eliminate judgments
that are close to reality and encourage judgments
that are far from the truth.
We call this “dive and push,” or that is,
don’t let the other party take our place.
If you have the upper hand in the negotiation,
the more power you display,
the more your partner will try to embarrass you.
They will try to claim all the extra points knowing
that they will have to lose the important points.
Another danger of having the upper hand in negotiation is
that you will tend to just get the deal,
not necessarily the best deal.
It stops you from trying to win the extra points.
However, these extra points are the difference
between a good deal and a mediocre one.
Another important thing in negotiation is trying to get as many points
as possible, but ultimately getting something.
Over the years,
I have met many people who claim to be excellent,
but it takes two contracts to fail before they can get one.
If both parties see themselves as benefiting from the contract
which is often the early stages of negotiations
except under unforeseen circumstances, if not, cancel the contract.
I am convinced that life is 10% what happens to me and 90% of
how I react to it. — Charles Swindoll
Often, one party benefits more than the other
because of the ambiguity or ambiguity of the contract
or letter of agreement.
Determine in advance whether a vague contract
or a tight one will suit your purposes better.
I prefer letters of agreement to formal contracts.
Formal documents often scare people.
A well-written contract is a tight contract
and formal language.
Always draft first.
As you begin to put the terms of the contract on paper,
many questions arise.
So, write your opinion on paper first.
However, if you come to negotiate in another region
or country and you do not understand the regulations there,
it is necessary to find out what the other party values
through the terms of the contract.
Once the draft has been revised and resubmitted by the partner,
you should return a written explanation or an revised draft.
Do not rewrite the terms of the contract from scratch
and make the two parties continue to waste time re-studying the contract.
If you are a contract drafter,
pay close attention to the “definition” part of the contract.
What is legally defined may change other points in the contract.
Many years ago,
when negotiating a contract with Shakespeare Golf Company,
we wanted the right to negotiate separately about the grip of the golf club.
Grips are sold to golfers
who want to change the grips on golf clubs
because they are old or no longer able to hold firmly.
This has nothing to do with the Shakespeare deal,
so we know that if we raise this issue,
they will object.
However, in the “definition” section of the contract,
we define it carefully as:
“A golf iron is a metal rod attached to a metal
or fiberglass shaft by means of a connector.”
We had nothing to do with grips,
so we had a separate deal with a company that manufactures golf grips,
and the Shakespeare-Player deal has been going on for years.
The speed of contract execution is of the utmost importance.
The excitement of making a deal wanes with time.
Do not send the contract to the Legal department,
but send it directly to the people you have dealt with.
Perhaps they, like us,
are impatient with our Legal department.
Work hard at your job and you can make a living.
Work hard on yourself and you can make a fortune. – Jim Rohn