For entrepreneurs, the idea of negotiation in business is often absent, or at least put on the back burner for things like hiring staff, finding office space, or hunting down suppliers. In all those things, however, there is negotiation.
On a recent episode of Negotiations Ninja podcast, I spoke with professional entrepreneur, business coach, and first-time author (Tiger by the Tail), Marty Park. Marty has started thirteen companies in six different industries in the past twenty-five year. When he started, he didn’t see the importance of negotiating or how to do it well, but over the years, he found the importance of negotiating properly as an entrepreneur.
“[Entrepreneur’s] overlook negotiation as an entire concept, time and time again,” says Marty. He attributes this to the “overwhelm” felt by many new business owners. There are so many other things to be thinking about, who has time for planning and strategizing negotiations? What Marty has learned, however, is that the planning and strategizing for every negotiation cannot be overlooked when starting and running a successful business.
New, and old, companies are often focusing on pushing the front end of the business. Get sales! Make money! As Marty says, we have to think about where we are spending money, as well, and that is where negotiation comes in.
Marty talked about an experience one of his clients had as a business owner. They thought they were having one of their best years. They had an 18% revenue increase from the previous year, which they later found out was only a 2% profit increase. Don’t underestimate the importance of saving money where you can. Negotiate with your suppliers for better prices, but make sure you’re negotiating smartly.
One of Marty’s worst experiences in negotiation was early on in his entrepreneurial career. He decided to negotiate with a supplier by threatening them that they would go elsewhere. What he didn’t think about was that he was a small fish to this large company, and him taking his business elsewhere did not affect them much.
Without researching who you are negotiating against, what options you have to fall back on, what your back-up plan is when they say you can leave, then you could be left going to a supplier with higher prices and starting a new relationship that might not benefit you.
“Every time I’ve been successful, it’s because I’ve gotten better at preparing and thinking through the scenarios,” says Marty.
For more about negotiating as an entrepreneur and Marty Park’s entrepreneurial experiences, listen to episode #117 of the Negotiations Ninja podcast.