Now You've Done It!
6 ways to guarantee yourself the bad end of a negotiation
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This story first appeared in the March 2002 issue of Entrepreneur. To receive the magazine, click here to subscribe.
There are no absolute rules in negotiation; every principle has an exception. But if you've done any of the following, you've probably pulled a rookie mistake:
- Not Having a Bottom Line: To get what you want, you've got to know what you want and be able to articulate your goals clearly. Before you sit down to negotiate, do yourself a gigantic favor: Make a wish list of what you must have, what you would like to have and what you can do without. This is your road map, and it will give you more focus and power at the bargaining table.
- Not Setting Your Goals High Enough: If you don't ask, you don't get, so start high. The loftier your aspirations at the outset, the more you'll end up with at the closing. Ask for more than you expect, or you'll get less than you deserve.
Ask for more than you expect, or you'll get less than you deserve.
- Not Flinching: I once knew an extremely accomplished attorney who was representing a couple of entrepreneurs who had taken their garage-based business and turned it into a multimillion-dollar enterprise. When it came time to sell their company, the entrepreneurs told their lawyer the price they hoped to get. Ultimately, the first offer came in--and at twice the figure they had in mind! Then, the attorney blundered: In his excitement, he accepted it immediately. Despite years of experience, he forgot one of the most basic negotiating rules: "Never accept the first offer." Had he flinched, who knows how much more money he would have made for his clients? (By the way, if it could happen to him, it can happen to anybody.)
- Negotiating for the Opposing Side: Once you make an offer, wait. Negotiating etiquette demands it. Joseph De Marco, a veteran executive at one of the major Hollywood studios, puts it like this: "Once I make you an offer, it seems to me you have three choices: accept it, which would make me very happy; reject it, which would make me very sad; or counteroffer, which means we can negotiate." If you gratuitously better your offer before they respond, you are doing their work. Great for them, but lousy for you. They sit back and smirk at what a softie you are, all the while waiting for you to really undercut yourself. Then they start negotiating.
- Making Concessions Before You've Heard All the Demands: If you want to be ambushed from the front, make concessions piecemeal. Not only will you embolden your opponents to keep asking for more, they'll wait to outleverage you with a final demand that you can't refuse. Hear them out on all their issues first. If appropriate, make them write it all down. That way, you get a bird's-eye view of the battlefield. After that you can make concessions, but make sure your opponent takes some demands off the table as well.
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