5 Surefire Steps for Successful Negotiation (in Business and Relationships)
If you want to be successful in anything…
One skill you’ll need to master is negotiation.
The best deals are ones that are good for everyone, which creates a win-win situation. During one of his lessons on investing, my rich dad said, “Many people seem to think that great investments grow on trees. They think that investing should be easy. Many think that all they have to do is hand their money over to a magician and suddenly, like magic, they strike it rich. In reality, investing is a continual process of searching, negotiating, financing, and managing people and money.”
The most difficult skill for people to master is the art of negotiation because we’ve been taught that negotiating or asking for what we want in life might be impolite. If you’re going to succeed in business and investing, it’s imperative that you master the art of negotiation. Knowing what you want and how to push for it is an art and one that takes time to master.
My First Negotiation
While I am not a great golfer, I have learned much about business and human nature while on the golf course.
My golf career began when I was eight years old. My mom and dad would drive us out to a remote country town on the Big Island of Hawaii to visit an old friend of theirs. Like most kids, I found sitting around in the living room with a bunch of adults boring, so I went outside to find something to do. On the porch of their friend’s home sat a set of golf clubs. Taking a wood driver out of the bag, I wandered down to his rocky driveway and began hitting rocks. After damaging his wooden driver, I got one of his irons and again began hitting rocks up and down his driveway. Needless to say, my mom and dad’s friend was not impressed with my introduction to the game of golf.
At the age of 12, I took up the game again. I was attending an elementary school filled with rich kids, so most of their fathers belonged to the country club. My dad and rich dad did not belong to the country club because, at the time, neither man was rich. The only way rich dad’s son Mike and I could get on the course was to tag along with our rich friends whose fathers were members.
It was not long before the head professional at the country club began to let Mike and me know that we were overstaying our welcome. He let us know that if our fathers were not members, we could not play.
At that moment, Mike and I began the first major negotiation of our lives. Somehow, we got the head professional to allow us to become members of the country club. In exchange for membership, we had to caddy for a set number of rounds of golf per month. Our dads were somewhat perplexed when we told them we had become members of the country club at the age of 12 – a country club they could not afford.
From the age of 12 to 15, Mike and I golfed and caddied every chance we could. Many days after school, Mike and I would hitchhike our way to the country club. We caddied to keep our agreement and played every chance we got.
Eventually, caddying turned out to be a great source of income. We got paid $1 per bag per nine holes. Soon we were carrying two bags each for 18 holes, making $4 a day. That was a lot of money at the time. At 15, Mike and I had made enough money to afford surfboards, so we put our golf games on hold.
Today, if negotiation is involved and complicated, I will often ask the person to play golf with me so we can discuss the deal. With a relaxed golf course environment, the negotiation has more time to develop, and when the environment is relaxed, there is often more flexibility in thinking. It seems the open space of the golf course allows for more open thinking.
The Art Of Successful Negotiation
#1 Do your homework
When it comes to negotiations, nothing tempers emotion more than a well-reasoned, fact-based argument. No matter how much someone wants to win a negotiation, it is incredibly hard to argue against cold, hard facts. So, it’s very important to do your homework before you walk into a meeting or make any compromises.
Talking about a real estate deal? Spend more time than you think you need to, to better understand the market, the property, the opportunities, and the angles than the seller. Have your numbers and be prepared to back them up with research.
Buying a business or investing one? Spend the time required pouring over the financials to see what others might miss.
Taking the time to do your homework not only disarms your opponent but also gives you the peace of mind to stick to your number when push comes to shove. If you have the information you need on hand, you can be confident in what you’re asking.
#2 Get him to say, “That’s right.”
Stephen Covey said, “Seek first to understand.” Paying attention to another human being asking what they’re feeling and making a commitment to understanding their world you’re not agreeing with them but you’re letting them know you understand.
Once you’ve listened and you understand what they’re asking for, summarize what you understand they’ve just said. This allows you to connect at a human level and also, ensure that you both are on the same playing field. There’s nothing more unproductive than trying to negotiate a deal when one of the parties isn’t clear about what the other is asking for.
#3 Get him to say, “No”
A really great way to break somebody’s thought patterns is I ask them questions where the answer is, “No.” I know this sounds counterintuitive to what traditional sales techniques have taught us.
For example, I was in the market for a new Porsche. So I went to the salesman that Kim and I have been using for years. He’s a great guy but has been taught to get the customer to say yes. He would say, “So Robert what do you agree that this car here is the nicest car you’ve ever driven?” Of course, I would say yes, but I was expecting him to ask these questions, and I would just have to say, “Hey Steve you don’t have to use your sales techniques on me, I like the car.”
The problem with “yes” is that people then believe there’s a commitment attached to it. People fear that they’re being taken for something. So saying yes creates some anxiety. But if you get them to say, “no” then they feel more comfortable. They feel like they’re in control.
#4 Power of Persuasion
One of the best lessons I learned from working with Donald Trump was his skill at negotiating a good deal. He says, “The best deals are good for everyone, which creates a win-win situation. Negotiation is persuasion more than power.” It’s a bit like diplomacy, although one can be a diplomat and still be stubborn.
You’ve got to know what the other side wants and where they’re coming from. Be reasonable and flexible, and never let anyone know exactly where you’re coming from. Knowledge is power, so keep as much of it to yourself as possible. And remember the golden rule of negotiating: “He who has the gold makes the rules.” That doesn’t negate equal opportunity, but that’s an unspoken fact that is definitely present. Always remember that you could be laying the groundwork for future business deals so the emphasis should be on fairness and integrity.
#5 Be prepared to walk away
I get it. We live in a world that can sometimes feel stacked against us. So, it’s easy to feel like the world is filled with scarcity rather than an opportunity. Given this, it’s tempting to take less rather than to lose out entirely on a good deal.
But here’s the thing. In the long run, giving into a bad deal now only compounds your losses in the future. Rather, be ready to cut your losses and move on to another good deal if reasoned negotiations go south.
The reality is there are plenty of good deals out there, and you will find something that works tomorrow-if you don’t waste your time, and capital, on a bad deal today.
Editor, Rich Dad Poor Dad Daily