Art of Negotiation

Chapter 12. Preparation is the key

I will prepare and somedays my chance will come. — Abraham Lincoln

Preparation is the true expression of a professional.

80% of negotiation success,

if not more,

is determined by your preparation

before the first conversation takes place.

Let’s start by considering the topic of the negotiation:

What are you going to talk about?

What is the purpose of this negotiation?

Clearly define what you want to achieve

and what will be on the table.

What are your goals

or objectives in this negotiation?

What do you want to achieve by entering this negotiation?

The better you understand your goals,

the quicker you will achieve them,

and therefore the easier

it will be to convey them to your partner.

Having options means having freedom

Having backup options available will be a powerful companion

to help you get the best deal in any negotiation.

The more options you have,

the more freedom you have to make the best decisions.

If you lack preparation,

your only option in negotiation is to agree

to what the other side has to offer.

It’s like having your hands tied.

But if there are many options,

or many paths,

you will have formidable bargaining power,

authority,

and momentum.

Create a variety of options in advance

and have them ready on paper.

Don’t forget to think through them carefully

before the negotiation begins.

Constantly developing more options

Always be prepared

and do your research to find any other source

of products or services

that might give you more options.

Find out how much you should pay,

and the time and date of delivery.

With plenty of options at your disposal,

you can enter a negotiation

with composure and ease,

allowing you to exercise the power of composure

during the negotiation.

When a set of options is available,

you have complete freedom to accept

or decline the other party’s terms and conditions.

And of course,

you will prevail in getting the agreement you want.

Learn everything you can

One of the essential parts of the preparation process is getting

to know the people with whom you will be negotiating.

Currently, the best tool to do this is the Internet,

especially Google.

With just a few clicks,

you will be amazed

with the countless results sent in.

Often you will know people who have negotiated or cooperated

with the other party.

Call them,

explain to them your situation and ask for advice.

Sometimes, a piece of advice or a piece of insight

It can give you a significant advantage

in the upcoming negotiation.

Let’s make a few phone calls

I have a friend who was considering buying a manufacturing company.

This company has a product line

that is especially relevant to your company.

The owner of the company bid a few million dollars,

plus rigid terms and conditions after the sale.

My friend called the manager of the bank

he was working with,

and asked if he knew anyone at the partner bank.

The bankers used to know each other,

and he hooked up with the bank manager of the owner

who wanted to sell the manufacturing company.

He discovered the company was in serious financial difficulty;

If management cannot find a buyer or new funding

within the next few days,

the company will have to close.

With this information,

my friend can sit down

with the demanding

and turbulent business owner to negotiate a favorable deal.

Finally, he could buy the company back with no upfront payments,

take on the existing debt,

and pay the owner a share of the profits from the business.

Question assumptions

Peter Drucker once wrote that “false assumptions are at the root

of all failures.”

Incorrect assumptions are one of the main reasons for disagreements

and misunderstandings in negotiations.

Much of a negotiation’s time is spent dealing

with certain false assumptions.

Before you start negotiating,

ask: “What are my assumptions?”

More specifically:

What are your obvious assumptions?

What is your implicit assumption?

What are the opponent’s explicit and implicit assumptions?

Is the other party assuming that you really want to enter the deal?

Are they assuming that you are indifferent,

friendly or hostile?

Are they assuming that you are easy

or difficult to deal with?

Assumption test

More importantly, could your assumption be wrong?

What if they are wrong?

If your main assumption going into this negotiation was wrong,

how would you change your claim or position?

One of the assumptions we make

when we enter a negotiation is that the other side really wants

to close the deal.

However, sometimes this is not true.

There are people who negotiate with you just

to improve their negotiating position

before entering into a deal with the real partner.

They just want to negotiate

with you to find the best deal

they can get before making the deal they want to someone else.

So think about how to clarify your assumptions

as well as the other party’s

before diving into the negotiation.

Identify key issues

Finally, when preparing for a negotiation,

ask: What is the bottom line?

How are our needs and wants different?

In what aspects will there be disagreement or conflict?

What details need to be discussed and resolved?

The more prepared you are for the negotiation,

the more advantageous you will be

and the better deal you will be able to reach.

For this preparation,

effectively conduct your pre-feasibility study.

Learn facts,

not assumptions.

Approach each customer

with the idea of helping him or her solve a problem or achieve a goal,

not of selling a product or service. ― Les Brown