Negotiation is an important skill for any business owner to master, and it can be particularly important for startup entrepreneurs on the hunt for seed money and/or early-stage investment capital.
Negotiation is an important skill for any business owner to master, and it can be particularly important for startup entrepreneurs on the hunt for seed money and/or early-stage investment capital. There’s no shortage of skilled negotiators out there who are quick to offer their takes on the most important aspects of successful negotiating, but different variables often determine which approach works best in a given situation. Here’s what some negotiators with a track record of success have to say.
Tali Raphaely, president and managing member of Armour Settlement Services, motivational speaker and author of The Complete Guide on How to Negotiate: Master the Art of Getting What You Want in Business and in Life.
The most important skill for a startup entrepreneur to master is talking less and listening more. Interrupting too soon and/or too frequently can result in your failing to get information that was about to be revealed and might have been helpful in your negotiation. You only learn about the other side’s goals, needs, and intentions when you listen to them. Let them talk as much as they want to. Eventually, they will say something that will tip their hand or provide you with helpful information.
Douglas McCabe, professor of management at Georgetown University’s McDonough School of Business
The three most important skills to master are how to prepare a negotiations checklist, how to develop a bargaining agenda and strategy, and how to identify good faith in the conduct of negotiations. Negotiation is the art and science of securing agreements between two or more parties. Developing the skills and confidence in negotiating can be learned with proper training. A big mistake to avoid is failing to determine beforehand what would constitute a bad deal--that, is determining what your bottom-line or walk-away point is. That should be done through careful research and preparation.
Derek Peterson, founder and CEO of Terra Tech, a $100 million agricultural company, and a former investment banker at Morgan Stanley
The most important thing a startup entrepreneur must do to succeed as a negotiator is to develop the proper state of mind. As a small company, you may feel like you need to capitulate, but it’s important to know your value at all stages of your company’s growth. It’s better to pass on a poor deal and stick to your guns. You may win less business, but the deals that you do close will be very accretive. Most startups need more capital than their founders can raise on their own, which means they need to reach out to venture capitalists to fund their growth. Those investors are extremely sophisticated when it comes to negotiating their ownership equity, and this is where having confidence in your value is most important. Shop for funding before you need it, have confidence in your product or service, and don’t cash the first check a funder gives you.
Leslie Bocskor, investment banker, entrepreneur, and managing partner at Electrum Partners, an advisory business to startups
Patience, diligence and confidence are the most important skills to master, and the confidence has to come from your patient and diligent research that yields facts to support your assumptions. Blind faith is not a valid basis for confidence as a negotiator. Very often, the difference between success and failure hinges entirely on the ability to present a thesis and have all the supporting information to demonstrate that the thesis is grounded in fact. The learning curve can be slow and long, and it requires patience and drive to put in the time needed to painstakingly construct a model that is both financial and narrative-based. It’s simple, but not easy. False urgency is a killer. If you approach a negotiation from the perspective of needing to get it done quickly, but without having done the research to support your assumptions, you will surely fail.
This article was originally published on Inc.