In search of the most effective strategies for negotiating deals and partnerships, we asked twenty-five CEOs and Founders to share their top tips and personal experiences. From understanding the need for equitable deals to starting small in negotiations, this article provides a wealth of insights for entrepreneurs looking to excel in their negotiations.
- Understand Needs for Equitable Deals
- Foster Personal Connection in Negotiations
- Leverage BATNA in Negotiations
- Aim for Mutually Beneficial Agreements
- Promote Trust Through Active Listening
- Remember Your Value, Find Common Ground
- Focus on Your Counterpart’s Interests
- Consult a Lawyer Before Closing Deals
- Partner with Value-Aligned Brands
- Prioritize Ethics Over Growth
- Ensure Partners Are Pleased with the Deal
- Showcase Your Work in Negotiations
- Be the First to Make an Offer
- Align Proposal with Partner’s Needs
- Anchor Negotiations with Best Terms
- Research the Other Party’s Motivations
- Get All Terms in Writing
- Control Emotions in Negotiations
- Stay True to Your Brand Identity
- Know When to Walk Away
- Cultivate Relationships, Consider Stakeholders
- Offer Discounts for Velocity
- Humanize Negotiations, People Buy People
- Hook Them with Your Story
- Start Small in Negotiations
Understand Needs for Equitable Deals
As a real estate investor who has learned the ropes of deal-making and partnerships, I’ve come to realize the tips and insights I share below hold true not only in property transactions but can also apply to almost any negotiation you encounter in life. It’s all about understanding the art of making deals that work for everyone involved.
I root my top tip for negotiating deals and partnerships in a combination of practical strategies and a people-centric approach. To be successful in real estate, I’ve learned that one must understand the Bidding Formula, the importance of knowing your sale type, and how to negotiate effectively based on the needs of the owner rather than just the property value. For example, in dealing with pre-auction properties, understanding the owner’s situation is crucial to securing great deals.
Foster Personal Connection in Negotiations
I may sound a little old-fashioned, but in my opinion, the most crucial tip for negotiating a significant partnership is to have a face-to-face meeting with the person involved. It’s beneficial to choose a casual restaurant where they can feel comfortable, perhaps even meeting up at a bar beforehand and then heading to dinner. The goal is to truly get to know each other and gain a deeper understanding of one another.
By doing so, not only will you grasp the specifics of the partnership, but you’ll also have a better understanding of the broader context surrounding it. This knowledge will empower you to negotiate more effectively and secure better terms for yourself.
Leverage BATNA in Negotiations
I think one of the most effective strategies I’ve used in negotiations is the “BATNA” approach: Best Alternative to a Negotiated Agreement. It’s about knowing what your options are if the current negotiation doesn’t work out.
For instance, while negotiating a crucial deal for our startup, knowing our BATNA gave us the confidence to walk away when the terms didn’t meet our expectations. This approach prevented us from getting stuck in a less-than-favorable deal. Eventually, we found a better deal that was more aligned with our goals.
Aim for Mutually Beneficial Agreements
Certainly, it’s crucial to understand what you want and what you can offer when negotiating deals or partnerships. Knowing the needs and desires of those you’re negotiating with is also helpful. Aim for agreements that are beneficial to everyone involved.
In a personal experience, while negotiating with a supplier, I found that understanding their challenges and suggesting solutions like larger orders over a longer period helped in arriving at a beneficial arrangement. This lowered costs and ensured a reliable supply, highlighting the importance of preparation, understanding the other side, and aiming for mutually beneficial agreements.
Through open dialogue and understanding the other party’s viewpoint, entrepreneurs can create successful deals and partnerships.
Promote Trust Through Active Listening
Frenzied contractors convince with their own point of view, silencing the other side. In my personal experience, negotiations are fruitful when both sides show genuine care, without losing sight of what each company brings to the table. It’s all about creating trust and valued contribution, where everyone feels heard, valued, and looking forward to a profitable collaboration.
Once, I came prepared with all the arguments to convince a prospect. During my presentation, I noticed that he was losing interest because I was not addressing his needs. I then proceeded to put aside my talk and started to listen. Then, I realized that not only did active listening give me a clearer understanding of the prospect’s needs, but it also saved energy and made the exchange more relaxed.
The key to a successful partnership is understanding that the goal is to team up, not to compete.
Remember Your Value, Find Common Ground
Negotiating deals is a lot like dating: it’s not just about impressing the other side, but finding a mutual fit. My go-to tip? Always come to the table knowing your value, but be ready to listen more than you speak.
Early in my entrepreneurial journey, I was pitching to a major client. Halfway through, I realized they were looking for something slightly different. Instead of pushing my original proposal, I pivoted, blending their needs with our strengths. The result? A win-win partnership that lasted years. Sometimes, the best deals aren’t about holding your ground but finding common ground.
Focus on Your Counterpart’s Interests
I’m involved in negotiating deals and partnerships with the founders I work with on a weekly basis. We negotiate big contracts, board meeting decisions, and all kinds of partnerships. I can tell you from experience that one of the best ways to negotiate a successful deal is to focus on your counterpart’s interests.
Recently, I worked with a client who was negotiating a partnership with a much larger company. The larger company had all the leverage, and my client was worried that they would be taken advantage of.
I coached my client to zero in on the larger company’s key priorities. They were looking for a partner who could help them expand into a new market. My client could demonstrate how their unique expertise and capabilities would be a valuable asset to the larger company.
In the end, my client could secure a partnership that gave them access to the larger company’s distribution network and helped them increase their sales by 20% in three months.
Consult a Lawyer Before Closing Deals
Ask your business lawyer to review contracts before signing. When we’ve built rapport with a potential partner, we want to imagine the best, but the outcomes of a business deal can go in a different direction if we overlook a small clause or misunderstand legal phrasing. Having the foresight to consult a lawyer before closing every business deal will serve you well in terms of time and money.
Partner with Value-Aligned Brands
When engaging in a business partnership, you must seek brands that share common values with yours. If this is the case, the other business will likely want to promote your product. Do not just ask any business to partner with—be thoughtful and strategic in your search for a worthwhile partnership.
Prioritize Ethics Over Growth
My top tip for navigating deals and partnerships as an entrepreneur is to never let your desire for growth supersede your ethics and instincts.
That uncomfortable feeling you have before striking a deal can be more than just cold feet, and you should ask yourself carefully whether there is something more to be worried about.
Take it from a long-time business owner: In the initial days of Bemana, I struck deals with people and companies who didn’t share our work culture and morals. Sometimes, it was as simple as conflicting personalities. Other times, the disagreements went much deeper.
The result was always worse than not making a deal at all, even in dry spells, and I learned to listen to the little voice that told me a particular contract or client wasn’t worth the trouble.
Ensure Partners Are Pleased with the Deal
As a part of four different partnerships, I’ve had a good deal of personal experience negotiating my position in them.
One thing I’ve learned is that it always benefits you if your partners are pleased with the deal. Of course, I want a good deal for myself, but more so, I want partners who are emotionally invested in our venture. If my partners didn’t get a good deal too, then at some point, I may deal with disgruntlement and their fading interest.
Showcase Your Work in Negotiations
To make beneficial deals and build strong partnerships as an entrepreneur, aim for excellence and let your work do the talking. When I’m negotiating deals or pitching new partnerships for Lower Street, I often create a compelling portfolio showcasing our best projects.
Even if it’s just one or two work samples, it allows clients to get a clearer idea of our potential and gauge the creativity we bring to the table. We’ve built trust right from the get-go by simply allowing our work to lead the way and demonstrate our value. After all, actions speak louder than words, and in our industry, the proof is in the podcasts.
Be the First to Make an Offer
The biggest lesson I’ve learned from negotiating with partners, clients, and suppliers over the last decade or so is to always be the first one to make an offer. This is a power play because you take control of the negotiation instead of waiting for the other person to lead.
When I propose a deal first, the other person is likely to accept (given it’s reasonable) because nobody likes the back-and-forth of making counteroffer after counteroffer.
Align Proposal with Partner’s Needs
Negotiations are, inherently, a value-driven proposal. Your goal is to give just the right amount of value to your potential partner, so that they give you what you’re looking for.
In your proposal, you should highlight the values and features that align the other side’s needs with your goals. In our case, for example, this meant showing a particular publisher how we had access to the exact audience niche they wanted to expand to, helping seal an important deal for the company. Identify something that they need, and then work to supply the resolution.
Anchor Negotiations with Best Terms
Typically, people anchor negotiations with their minimum acceptable terms, then compromise downwards. Reverse that approach. Lead with your “best-case scenario” terms, even if they seem high.
This anchors the negotiation in your favor and makes the other party work upward from your best terms. They may not fully meet your most ambitious asking terms, but you’ll likely end up ahead versus starting with the bare minimum.
For example, there’s a deal on the table and ideally, you want $50,000 and a minimum of $30,000. Don’t open with asking for $30,000. Start by expressing that you’d love $50,000 in an ideal world. The partner will then have to work up to make the best offer they can. You ultimately may settle at $40,000, which is ahead of your minimum.
Anchoring with your highest upside rather than lowest acceptable terms frames the negotiation differently. It shows self-awareness and establishes value upfront. However, focus on ethical win-win outcomes, not manipulation.
Research the Other Party’s Motivations
I always try to put myself in the other side’s shoes and really try to understand what might be motivating them to do this deal. For major partnerships, I’d recommend going all out and taking your team (or just yourself) to somewhere other than your normal place of work. Run a role-play exercise where you take the roles of their leadership and try to second-guess what their goals are. Sometimes you’ll have an inkling of what they are, but dig a bit deeper and you may find other potential driving forces for the partnership or deal.
Many years ago, I negotiated data-licensing deals with all the major search engines and with one in particular, this exercise helped me determine that their primary goals were around SMB customer acquisition, rather than just acquiring small business data. This helped me negotiate a per-customer bonus which was extremely lucrative when we signed up seven times more customers than they expected.
Get All Terms in Writing
My single greatest tip for negotiating deals and partnerships is to get everything in writing. Even if it is someone you trust and someone with whom you have had deals in the past, get the expectations and roles of everyone involved in writing. Get the terms of the contract and the possible resolutions if there are disagreements. This is what it takes to be a professional!
Control Emotions in Negotiations
The best tactic for negotiation is always paying attention to people’s emotions and perceptions, as it gives you an opportunity to manipulate their weaknesses. As the CEO of a travel firm, I understand that having a proper understanding of how other people perceive their negotiation positions will strongly influence your participation during the negotiation process.
Understanding fundamental psychology principles can help to make you a better negotiator. It’s vital for you to read people’s emotions, as well as control your own emotions when negotiating with others. Many leaders are always comfortable with their employees, as they know how to read their emotions and perceptions. Try your level best to understand the people you are negotiating with to avoid emotional reactions and misperceptions in the negotiation process. Simply, avoid shouting, threatening, or showing any form of emotion during negotiation.
Stay True to Your Brand Identity
Know when to say no. It’s so important for entrepreneurs to stay true to their brand identity. Running an early-stage startup can make you feel like you need to grab onto any available partnership or business deal, but nothing could be further from the truth.
Consistency is crucial to building and maintaining a loyal relationship with your customers. If you don’t keep your brand partnerships aligned with your mission statement, values, and identity, then you run the risk of damaging the brand or turning away members of its existing base.
Focus on building partnerships with businesses that complement your own. This will serve you better in the long run than the immediate benefits of striking a deal.
Know When to Walk Away
One of the most important lessons I’ve learned is knowing when to walk away from a negotiation. Not every deal or partnership is the right fit, and sometimes it’s better to part ways amicably rather than force an agreement that doesn’t align with your vision or values.
This approach ensures that I invest my time and resources wisely in pursuits that truly benefit my business. Building genuine relationships, being prepared, actively listening, demonstrating patience, finding common ground, and knowing when to walk away are my top negotiation tips. These techniques have helped me secure valuable deals and partnerships as an entrepreneur.
Cultivate Relationships, Consider Stakeholders
Early in a budding relationship with a nonprofit, I decided the Director of Advancement (lead donation officer) would be a great partner to cultivate a relationship by bringing more PR to his agency. So, I asked him if he would co-present to a national nonprofit educational organization with me. He could explain the services he needed, and I could provide a timeline explanation of how I met his needs.
It turns out; he sought additional public speaking experience that was never expressed until we debriefed after our talk. He expressed deep gratitude for my selecting him and his organization to introduce their mission, a small gesture on my part, which sparked what turned into a 20-year client relationship.
Accordingly, it became common for them to consider me, a third-party vendor, an integral part of their team for major projects. They brought me in early in the planning process, asked for my participation at the event, and commented at the “postmortem” review after the event.
Offer Discounts for Velocity
My best tip for negotiating deals is to only offer discounts in exchange for velocity.
Many new negotiators tend to offer discounts far too readily, believing that it will help close the deal. In reality, the vast majority of buyers are focused on value, not cost, especially if you have pitched to them correctly.
However, the real limiting factor tends to be velocity, as the probability of success diminishes if the sales cycle drags on.
Consequently, you should only offer discounts to increase sales velocity. For example, a 30-day special deal, which will expire if not utilized, is a great way to create a sense of urgency without devaluing your product.
This approach improves close rates, protects your perceived value, and shortens the sales cycle, making it a great all-round strategy for deals and partnerships.
Humanize Negotiations, People Buy People
As a business owner, it’s challenging to keep track of each entity that’s affected by a deal. You, your board, the person you’re going into business with, and their board, are all equal participants. You should work towards a deal that benefits everybody involved.
Disadvantages for one party can cause rifts within the team that harm everybody down the line. If you focus on what benefits both of you, rather than just you, you’re much more likely to close a deal. Your partners will remember your consideration for them and will probably return to you for repeat business.
However, the most important stakeholder will be your customers. Don’t get caught up in the technicalities of a merger or partnership without deeply analyzing the effects on your customer base.
Hook Them with Your Story
My top tip for negotiating deals and partnerships is fairly simple. Just remember that the people you’re talking to are human as well. The temptation can be to just focus on facts and figures in an attempt to be your most professional self. While being professional is important, so is your story and the human side of what you’re doing, especially if you’re looking for investment in your partnerships.
Remember that people buy into people, not just products or services. So while you may wow them with exciting numbers and potential for growth, you also want them to feel hooked on your story. They should believe that they want to invest in you as an individual because that is what will keep them partnered with you.
Start Small in Negotiations
Figure out how to start small. This is especially true with partnerships. If things are working well and you’re delivering on your promise, then the deal or partnership will grow. This is downstream from being able to deliver quality, but if you have that covered, it’s only a matter of time before a good partner recognizes it.
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