Think Like a Negotiator
Knowing how to negotiate is always important, especially when cash is tight.
When celebrity hairstylist and beauty expert Billy Lowe, 38, decided to relocate his six-figure business from Beverly Hills, Calif., to West Hollywood, he took advantage of the downturn in the economy to negotiate a deal with his new landlord. For bargaining power, Lowe stressed the benefits of his occupancy: He already had a loyal following of high-caliber clients; he would give the building a clean, polished, updated look; and the landlord would incur costs if the building sat vacant for too long. The landlord was convinced and agreed to both a reduction in rent by about $400 per month and a three-year lease at a fixed price.
Meanwhile, Ken Wisnefski, 37, founder of WebiMax.com, a provider of online lead generation services in Mount Laurel, New Jersey, managed to secure a better advertising deal. By committing to a longer-term advertising contract, he cut his ad costs in half. He projects 2009 sales to exceed $1 million.
Knowing how to negotiate is always important, but when cash is tight and sales are down, this skill alone can make a huge difference. In fact, Jim Camp, a negotiations coach and author of Start With No: The Negotiating Tools That the Pros Don't Want You to Know, estimates that 90 percent of an entrepreneur's failure is due not to poor business planning, but rather a failure to negotiate properly. So how do you seal a better deal? Camp offers the following tips:
- Create a vision. Just as Lowe did, it's essential to clearly demonstrate how this partnership or contract will benefit the other party. "You've got to be in their world, creating a vision for them on what this does for them," Camp says. "So often people get bogged down in facts and figures and data."
- Don't believe you have all the power and avoid using terminology like "take it or leave it." "Negotiations are done in an entirely emotional arena," Camp says. "The human mind functions in the emotional until it makes a decision. People who are rough or aggressive or pushy often create an emotional reaction that they're never going to be able to overcome."
- Know what you want to get out of the deal and make sure it's achievable. "So often I run into entrepreneurs who don't really know what they want," Camp says. "They have to know what they want. That's a critical piece to the puzzle."
- Don't compromise beforehand. "Never ever go into a meeting with a fallback position," Camp says. "That's the worst thing you can do."
- Invest in the skill. Don't rely only on your natural talent because negotiation really is a science. Read a book, sign up for a course and look at each negotiation experience as an opportunity to learn and improve.
To learn more about negotiating for your business, click here.
Entrepreneur Editors' Picks
This Founder Quit His 'Prison'-Like Teaching Job Within 2 Months. Now, He and His Sister Are Helping Other Teachers Leave the Classroom and Achieve Financial Freedom.
If You Focus on Problems, You'll Only Find More Problems. Here's How to Focus on Solutions.
Facing More Than 15 Years in Prison, This Founder Transformed His Hustle Into a Powerful Personal Brand and Business. Now, He's Giving Back in a Big Way.
Apple Asks This Jarring Interview Question as a Secret Way to Evaluate a Candidate