Revenue Engineering
Negotiating
Take Advantage of a Recession: Renegotiate Contracts
Oct 5th
My business coach always told me there are only two things that are worthy of your time – increasing sales or decreasing expenses. Everything else is waste.
Not long ago I had lunch with a CEO friend and advisor, whom I’ll call Bill, who is currently in the process of building his second billion dollar company – and is well on his way I might add. I love meeting with Bill because he not only freely talks to me about his company and the initiatives he has underway, he actually seems eager to tell me about what is going on. In addition, he unemotionally details problems he’s working on solving, as well as explains how he is approaching it. Needless to say I always learn so much.
Bill’s current company is a high-end membership, luxury resort destination club for the wealthy. He owns palatial property all over the world that members use for vacations and/or business – everything from beachfront property to ski resorts to metropolitan destinations, such as Manhattan or Paris. So on one side the company is a real estate sales and management company, and on the other it is a membership sales and management company.
When Bill showed up for our lunch he told me how busy they are taking advantage of the recession – which took me by surprise and made me wonder how he was "taking advantage" of the recession. As he elaborated, he told me of one line item for a number of properties he owns in the Bahamas and how a particular vendor of propane – used merely for his hottubs and outdoor grills – was charging astronomical rates. During the downturn, contacting this vendor to renegotiate the contract is not only acceptable, it’s almost expected. How relenting do you think this vendor be with the alternative of a great customer needing to go elsewhere?
In another example, a bank where Bill has numerous loans for his properties had been charging a pre-recession interest rate. On initial contact, the bank simply refused to work on different terms, so Bill cautioned the bank that he may have no other alternative but to turn the properties over to the bank. Interestingly, the bank didn’t want those properties back in their management in this economy and was happy to renegotiate.
Use the state of the economy to your advantage. Renegotiate contracts so you can free up cash flow to use for business growth. Perhaps you should create a special project to have your salespeople making those calls. Perhaps you should hire a bulldog consultant that is good at negotiations (hint). Either way, it’s money in your pocket.
3 Suggestions to Empower Negotiations
May 28th
Ever feel like the other party has the upper hand during negotiations? Have you ever felt like you are the one in the “desperate seat”? Here are three tips to keep in mind when going to the table of any negotiation.
- Talk as Little as Possible
I’ll go the grave telling people the key to doing better in ANY business situation is to listen. In negotiations, when you listen more than you talk, you are gaining the upper hand because you are gathering important information about what the other side hopes to accomplish and what is important to them. As you listen, you also give yourself the advantage of learning what could kill a deal, where you may be able to ask for more, where you agree/disagree, etc., all of which helps you be more creative. On the other hand, if you talk more than you listen, you’re giving the other side the advantage.
- Check Emotions at the Door
Negotiations can get scary. Tactics used by some in negotiations are to meant to draw you out, rush you, frustrate you, make you impatient. When this happens, it is very important to maintain your cool. As soon as you start to lose it, you are playing into their game. To get your counterpart(s) back on track, get them to talk. I recommend lowering your voice to almost a whisper, and start asking questions and/or acting confused; “what do you mean?”, “can you help me out?”, “I don’t understand”. Keep this going until the discussion gets back on track. By the way, it’s fun!
- Always Be Prepared to Walk Away
The best salesperson is the one who has a lot of business ready to close. Prospects sense it. Likewise, in negotiations, if you have alternatives, your confidence shows. You radiate to the other party something different. You become more appealing. However, avoid being cocky and do not disclose your alternatives as this can lead to a hostile situation and one that can negatively affect your purpose. But if done right, your counterpart will feel they need to satisfy you to get a deal done… and why wouldn’t they, right?
To me, negotiating has become one of the more fun aspects of business as I’ve become better at doing the aforementioned. There are numerous books about negotiating (off hand I recommend
How to Get the NDA Signed
May 1st
An NDA can go a long way in protecting your intellectual property, and it is important to have your potential partners, vendors and investors agree to execute one prior to doing business if you have something worth protecting. When I first started pitching Talus’ health care exchange concept, getting an NDA signed by the 800 lb. gorilla Wall Street companies or investment firm used to seem like such a big deal. We were told by other startups, and even our advisors, that the companies we were approaching simply would not sign one. And while it is true that some companies have policies that keep them from entering into this agreement, most do not and will agree to sign one after some negotiating. Following is what I’ve learned to get an NDA executed every time.
Build Story Before Mentioning NDA
“What’s in it for me?” is what everybody wants to know. Well, you need to get your audience involved in what you’re doing. Formulate a story that doesn’t go into your IP (intellectual property) until they’ve bought into what you can accomplish for them. Then, when they want to know the secret sauce, you say “I’d be happy to… we just need to get a mutual NDA in place.” So much easier.
Always Add “Mutual”
You have NDA’s and you have Mutual NDA’s. Difference? The company you are talking to is protected too – and it is good to extend to protection to them regardless. By using the word “mutual”, it takes the attention off of you and makes them feel warm because you’re thinking of them… right?!
Blame Your Legal Council
There’s nothing like making somebody else look like the bad guy, especially lawyers. Well, the lawyer gets paid the big bucks for being the bad guy, so tell your contact that your hands are tied unless you get an NDA in place. Look to the floor like an ashamed child and say “sorry, I don’t have a choice.”
Be Prepared to Walk Away
How loyal do you look to your audience if they sense you’d compromise your own IP? Well, if you ask for an NDA and get push-back, you need to be prepared to move on to the next target. It may well be a test. In addition, you shouldn’t be compromising your IP. That is your asset!
Establish Your Professionalism
How eager do you think a major potential partner, vendor or investor will be to do business with you if you’re weak on the very first negotiation? Yes, this is most likely your first negotiation for this potential relationship and doing the negotiation for an NDA is a great way to establish a positive image in their minds about how professional you are. Do it well and get it done!
I stress to you in holding firm and getting what you want. You’re a professional and you have something they need! No need to compromise.
Ending Endless Follow Up
Feb 4th
Stop Getting “I Want to Think It Over” Responses
Tired of not getting a decision? Tired of having prospects hide from you after your presentations? You need to get out of follow up hell. Watching the following video will help you set proper expectations so your prospects know up front that it is not okay to sit on the fence.
