T. Randolph Catanese, Esq. © 1999. All Rights Reserved.
A successful negotiation is rarely achieved without preparation. Like anything else, the time and effort put into preparation will pay off in the end. Sometimes the payoff is much larger than expected. This four-part series will identify and discuss successful negotiation techniques in the context of preparing before the negotiation and the timing and means of confirming an agreement once it is achieved.
Each day negotiations take place in every nook and cranny of life. You negotiate with your spouse before you leave your home (who will pick up the kids and when?), you negotiate when you are driving to work (who gets to pull in front of whom and when?), you negotiate with your co-workers (who gets to take lunch or a break first?) and you negotiate with your boss (when can I take vacation?). Even when you think you may not be negotiating you are negotiating in almost every relationship you have in life.
Unlike negotiations which take place in your everyday personal life, the consequences of good negotiation in business can be the difference between whether the business succeeds or fails, and if it does succeed, how large the success is for the business owner. Successful entrepreneurs will tell you that it is their negotiation skills (and the skills of their professional advisors and employees) that make the difference between success and failure in their business enterprise.
Successful entrepreneurs know that preparation is the key to a successful negotiation. Preparation means many things, but should include – knowing the other side (get into their head and make an effort to understand from a psychological standpoint what they want and need to make the deal happen), analyzing the other side’s viewpoint of the transaction to determine where they believe they may be weakest, and likewise do an analysis of your negotiation position and understand your strengths and weaknesses; then, identify the core goals you wish to achieve and those goals which are important, but could be given up to make the deal happen as a whole.
Once you understand the respective psychological and business issues on both sides, then put pen to paper (or keystroke to computer) and begin to work up your negotiation scenarios.
What is a negotiation scenario? A negotiation scenario is an identification of the core elements you need to have in your agreement, or those elements which if left out mean there is no deal. The next set of elements in the scenario would be those goals which are beneficial and reasonably significant to the transaction or those goals which you want to have, but if you lose them you could still do the deal but it would be much less attractive. And finally, the last identified scenario goals would be those which are incidental or discretionary, in other words, those goals which would make the agreement even more attractive to you, but if you did not get them the deal could certainly go forward in any event. To summarize, your negotiation preparation and scenario analysis should include core goals, significant goals and discretionary goals.
Once you identify your core, significant and discretionary goals, then model how these goals would interact with each other given what you believe to be the give and take of the negotiation process. Many times, when you go through this process you will identify at least two and possibly four situations where you are projecting an end result in the negotiation. In other words, take time to specify the goals you wish to attain in one or more optional positions. For example, situation one would include you getting all your goals met, while situations two through four would contain less and less of your desired goals. Your core goals would be in each situation (one through four), whereas your important goals might only be in situation one and two and the discretionary goals might only be in situation four. If you don’t feel comfortable preparing all the negotiation scenario and identifying your core, significant and discretionary goals, on your own, again, it’s a good idea to ask a business lawyer litigation to double-check your work.
In the second part of this series a case study will be presented followed by when and how to confirm an agreement once the deal points are reached.