Negotiation Basics: 8 Common Questions and Answers
Whether I'm on the set of Entrepreneur Elevator Pitch, haggling with shop owners in China or running my businesses, I'm often asked questions on the best approach to negotiation. So, I've compiled some of the most common ones I get, along with my answers, to provide you with insights on how to approach your next negotiation.
1. What is the greatest asset to have when you're going into a negotiation?
There is no bigger asset that you can bring into a negotiation than value. If you understand the paradigm of value (the 100/20 Rule) and make sure you provide maximum value to your negotiating partner, that will be your greatest asset.
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2. What quality is the most helpful during a negotiation?
Other than understanding value, I wholeheartedly believe that fairness is your most helpful quality in a negotiation. If both parties feel they had a win-win and that they reached a fair agreement, they'll be more likely to work together in the future. And if both sides are able to deliver on the agreement, they'll be eager to start another project.
3. How does ego play a role in negotiation?
Ego plays a role whenever people think in terms of scarcity or competitiveness (e.g., "must win!"). In negotiation, you are confronted with the ego's need to be right, offended or superior, both from others and from ourselves. When you understand the needs of your ego, as well as the egos of those you are negotiating with, it's easier to avoid the ego's attempt to manipulate a negotiation. Of course, you can also use someone's ego against them, such as threatening to walk away if you reach an impasse, because most people's egos will not allow them to lose a profitable deal.
4. During the negotiation, does the need to please ever play a role?
The need to please others is actually another of our ego's defense mechanisms. Those people who have a need to be liked ("people pleasers") generally come out a loser in negotiation because they're afraid to ask for fair value in return.
5. What role does leverage play during negotiations?
Leverage comes in two different modes, depending on your approach to negotiation. If you are operating from a mindset of scarcity, leverage is when you have the means to manipulate or bully someone into doing something. When you operate from abundance, true leverage comes in providing as much value as you can (within reason), trusting the universe to fill the void you create and making a sizable ask that you view as fair and equitable. In that situation, the value you can bring is your leverage.
6. How does someone learn how to negotiate?
There are two ways to develop the skills, knowledge, and drive necessary to be a great negotiator.
A. You can learn by practicing on your own. Set up a hypothetical scenario where you need to provide value and ask for value in return. Either create an imaginary "adversary," or practice with a buddy who also wants to hone their negotiation skills.
B. Or, you can seek mentorship from someone with situational knowledge on the subject.
7. How do you present the value you bring to the table when negotiating a deal?
It's important to be clear, concise and balanced in what you convey, and to think in terms of RIC analysis: What are the Reasons that your proposed deal is best for all involved? Clearly state the Impacts that an agreement is going to have on your potential partner's business. And finally, determine what the Capabilities are that each side of the deal has, wants or needs. Align the Reasons, Impacts and Capabilities with the value that you can provide, in order to best showcase your mutually beneficial opportunity.
8. Are there times when you need to take a break from negotiation?
Absolutely. Anytime where you feel off-kilter or can't get back to center during a negotiation, taking a break will be helpful. You can either take a mental break (that nobody knows you're doing) by taking a few deep breaths, or you can take a physical break, by calling a time-out, and temporarily removing yourself from the situation until you're able to get back to center.
No matter what kind of negotiation you are engaging in, it is important to remember three basic rules, compliments of my former business partner, super sports agent Leigh Steinberg:
- Never negotiate to the last penny.
- Always be fair.
- Don't do business with dicks.
If you can keep these ideas in mind and clearly express the value that you bring and expect in return, you'll build long-lasting business partnerships that benefit everyone involved.