Never negotiate out of fear, but never fear to negotiate.
Over the course of the past few months I have been working with a number of retail clients who needed assistance negotiating new leases. Now I realise that most retailers do not negotiate new leases that often, probably every three or five years at best, however I noticed a common thread which I found interesting. In virtually all of the cases I encountered, most people did not have a basic understanding of the principles of negotiating. I was surprised by this as retailers are also business owners and not only need to know how to negotiate with landlords, they need to know how to effectively negotiate with suppliers, employees, local councils, solicitors etc.. the list goes on. It became apparent to me that I needed to take some of the mystery out of this “black art”, because it is a learned skill, not something that comes naturally to most people.
As a result of my observations, I recently wrote an article for one of my clients – they are a large retailer association with several thousand members on their books. I thought I would share this article with you – I hope you find it interesting and of some benefit.
Never negotiate out of fear, but never fear to negotiate! The wise words of John F. Kennedy, 35th President of the United States summed it up perfectly during his inaugural address on January 20th 1961. How prophetic his speech was – the following year, this young president was to be tested like no other man in history before him. The fate of the world literally rested on his shoulders.
For those of you who are students of history or old enough to remember the Cuban Missile Crisis, it was undoubtedly the closest we came to all out nuclear war.
Growing tensions between the then Soviet Union and the Western Alliance spilled over in mid 1962 after a US sponsored a coup failed to overthrow the then Cuban President Fidel Castro. After a series of tit for tat retaliations, it was discovered that the Soviets were building nuclear missile silos in Cuba, just 360Kms from the US, well within striking range. The US were outraged by the move and so began 2 weeks of shuttle diplomacy, threats and counter threats by both sides. The US and Soviets seriously contemplated a preemptive nuclear strike on each other – the world was teetering on a knife’s edge.
So, what happened, well in the end they negotiated a deal. Both sides realised a third world war would be catastrophic for everyone, so they had to slog out a deal, whereby both sides would not lose face. The US promised it would not invade Cuba, nor back any further attempts to overthrow Castro and also lift it’s naval blockade of Cuba. The Soviets in return would cease building missile silos in Cuba and remove all offensive weapons from the island.
The negotiations proved very difficult and whilst Kennedy did an outstanding job of preventing the situation to escalate any further, there is one fact that most of the world was not aware of. The Soviet leader Nikita Khrushchev also managed to persuade Kennedy to remove all the nuclear missiles that were based in Turkey and Italy, however this was kept from the public for several decades.
So what is the relevance for a retailer you might ask…The one overriding lesson that we can learn from that moment in history is that before you begin negotiations, you must know what you want. In this case, Khrushchev really wanted the nuclear missiles pulled out of Turkey and as for Kennedy, he was prepared to concede on that point – it sounds simple, but most people start out negotiating without a clear plan of what they want and what they are prepared to concede on.
I have compiled 10 basic steps that I find very helpful when negotiating. I realise there are hundreds of books and dozens of courses out there, but I find the following works for me – I wanted to share them with you.
- Decide exactly what you want to achieve from the negotiation. Be specific in terms of amounts of money, timelines, actions each party must take and terms of the deal. These should be minimum terms that you cannot concede on (non-negotiable)
- Expect that you will need to give some ground and concede in certain areas. Decide what you are willing to give on, be clear and do not give on anything else (negotiable)
- Before the initial meeting, try to put yourself in the other party’s shoes and imagine what they would want from the negotiations. It will help in terms of finding common ground later
- When commencing negotiations, try to establish rapport with the other party, start conversations with anything you might have in common.
- State your case, clearly outlining what you will do and what you expect in return. Ensure your tone and manner is always friendly and positive, as negative body language is easily detectable
- Listen to the other side’s points of view, try not to interject and always be polite, regardless of how inflammatory they may be. Make mental notes where you have common ground
- Keep discussions moving by asking open ended questions and continue to confirm agreements wherever you have reached consensus. If you encounter areas which you just cant seem to agree on, park them for the time being
- If negotiations become heated, try to keep a cool head. It is easier said then done, especially when your livelihood is at stake, but really try to remain as calm as you can
- It is very common to not reach agreement on all points during an initial meeting. As long as negotiations are positive, it is perfectly ok to hold another meeting or even series of meetings, so as long as negotiations stay on track.
- If you are able to reach agreement on all terms it is important to restate the entire arrangement to ensure everyone is crystal clear on every aspect of the deal. Everything should then be put in writing as soon as possible.
I realise these steps are very simplistic, however I find them very effective when negotiating and I hope you find them useful too.