Negotiation (NEF workshop)
Friday 30th May 2014, CCT Venues Farringdon, London.
The final workshop in the NEF learning programme for the year was a bit of a special one! The topic of discussion for the day was Negotiation, and we we’re very lucky to have Clive Rich deliver the workshop to us. Clive is a very successful professional deal negotiator, the author of The Yes Book, Simon Cowell’s negotiator, and has closed deals with a number of world famous companies, including Sony, Yahoo and Apple! http://www.colsemydeal.co.uk http://www.lawbite.co.uk
“The more you give the more you get – and other tips for negotiating under pressure”…
At the start of the day we went round the room and called out what we all wanted to get out of the day, maybe some questions people had on live negotiations they are dealing with at the minute, either in the workplace or on businesses they are launching. We also brainstormed all the different types of negotiation an Entrepreneur might at some point face on their journey…
Different negotiations faced by an Entrepreneur:
Insurers, unions, shareholders, investors, co-founders, customers, employees, councils, HMRC, strategic partnerships, media partnerships, consultants / contractors, software development, bloggers / press, marketing agencies, exits, insolvency, manufacturing, distributions, suppliers, regulators, utilities, compliance, lawyers, property, retailers, licensing, joint ventures.
We then did an exercise to highlight what we all thought are the characteristics of both a good, and a bad negotiator.
Characteristics of a good negotiator:
Not desperate, authentic, empathetic, good listeners, see value from both sides / reasoned perspective, honest, patient, flexible, articulate, assigning values, presence, hygiene, options, appearance.
Characteristics of a bad negotiator:
Impatient, stubborn, dis-engaged, over-emotional, unprepared, rude, dishonest, not present, poor listener, desperate.
“Sebr worked out that Britain loses £9M an hour from poor negotiating”. Also – “the average UK company could increase its annual profit by 7% (through better negotiating)”.
“Negotiation is a collaborative game, its is not a ‘zero-sum’ game – i.e. you don’t have to lose, for me to win…”
Some typical things going through peoples heads in the run up to a negotiation:
- 3 possible outcomes (yes, no, maybe)
- What does the other party want?
- How to kick-off / start?
An imposed/forced deal, more often than not doesn’t work out – people don’t work well or delivery properly because they aren’t happy or engaged.
‘Fusing’ is having the attitude: “everyone’s needs are important in this conversation… but not at the expense/loss of my own needs”
“We get much more out of the game if we are in collaboration”
It’s not necessarily a good idea or sustainable, to take advantage of a weaker party in a negotiation.
Consider their needs/requirements – you may well want to deal with them again at some point in the future, and it’s not good if they have a bad memory or experience of dealing with you. Also; negotiating is only the first part – next, you will of course want them to deliver well on their end of the bargain and possibly become a long-term partner!
We then had Will Hamilton, experienced entrepreneur and founder/owner of LaunchPad recruits come and join us for a Q&A session. I’ve captured some of Will’s best comments below:
“Most important is what you do beforehand – know your position and alternatives (options)”
– Will used a deal breaker in his most recent seed round of fund raising. The deal breaker actively found lots of potential investors and options. (Paid deal breaker / broker 5% of the value of the fund raise).
“in a simple angel round (aiming to determine) – are you sold or not, are you interested?”
“Just sell the business and yourself… then the terms will take care of themselves”
“I went for a straight forward deal – no complex terms. Close fast and move forwards”
“Existing investors re-investing – is a great sign for new investors!”
“You can say NO to terms!”
Some possible sources of bargaining power in a negotiation:
Information, expertise, market power, scale or weight, referral power, network power, numbers (size of team sat round the table), relationship power, rules, regulations or standards (in your favour), authority power, personal power, scarcity, time (constraints for the other party involved).
- ‘The Negotiating Process’ – The 7 steps:
- Climate Setting
- Wants & Needs
- “Coinage” – something which you can give that doesn’t mean much to you, but means a lot to them. An example might be introductions to your network, office space, referrals etc.