Assess the risks of your negotiation to succeedSep 08, 2022
Learning to negotiate is no different than learning any other new skill. It takes repetition to learn the component parts. It takes incremental success to develop confidence. And your performance will improve immeasurably if you apply time-tested strategies to your approach. I know, negotiation can seem overwhelming at first. That’s why it can be helpful to start by building knowledge. Understanding the terrain (and the risks involved) is one of the most important steps you can take to be successful in negotiating for more money, stronger partnerships, and more strategic opportunities.
It’s just like planning a bike trip
My husband and I recently returned from a cycling trip in the Black Hills of South Dakota. Having come from the flat prairies of Manitoba, it was a significant challenge for our bodies and our minds. But the experience reminded me in many ways of the experience of approaching a new negotiation situation.
As we prepared for the trip, we mapped our driving route and great restaurants on the way (if ever in Sioux Falls, be sure to stop at Tortilleria Hernandez – it’s a hole in the wall, but it has amazing authentic Mexican food). We booked our hotel. We checked the weather and packed for all the possibilities. We also spent a lot of time researching the trail we were going to ride.
We were planning to ride the George s. Mickelson trail, which is a 109 mile trail with 14 different trailheads. Our plan was to only do a few sections of the trail in an out-and-back fashion so we would always return to our car. With a goal of doing between 30 – 50 km each day, that meant we had dozens of options to choose from.
So we did our homework. We looked up topographic maps and assessed the grade of ascents in each section. We used Google Maps to look at sections of the trail that ran parallel to roads to find the prettiest options. We read reviews of hundreds of people who had ridden the trail. And all of this was before we even left Winnipeg. Right up until the night before our first ride, we were still deciding which sections to do the next day. In fact, a conversation with a border guard as we crossed into the USA led us to consider an option that we thought was off the table.
Prepping for a negotiation
Doing the prep work for a negotiation can feel a lot like our bike ride prep. Right up until the last minute, you have the opportunity to gather and incorporate new information. Yes, you want to have a strategy in place, but when you learn new information, you’ll only benefit by adapting and taking advantage of it.
So what kind of research do you need to do before you go into a negotiation? I like to think about the three big questions:
- What do you think they want?
- What do you want?
- What are the actual risks?
What do you think they want?
In most negotiations, you will know key information before you even go into the conversation. A client of mine recently worked through a negotiation where she had a ton of inside knowledge about what the client was looking for. She understood the outcomes they wanted to achieve from the consulting contract and was able to demonstrate that her approach was exactly what they needed to get there.
As you sit down to prepare for a negotiation, take out a piece of paper and write down everything you know about the other person and their company, what they are trying to achieve, and what you think they might want from you. When you draw on this in your actual negotiation, you can wow the other person with your ability to reflect back to them what their priorities are. This helps build and reinforce your working relationship and build their confidence in you that you will be able to deliver.
What do you want?
I know, I know. You want more money. But how much more? What is the rate that would make you feel like they are compensating you generously? Too often, we think about what we need from a negotiation, but fail to stretch that thinking to what we want. And often, there is a wide gap between those two numbers. If you only know what you need, you’ll probably land on something that is pretty close to that number. So it’s essential that you sit down and dream big.
On another piece of paper, write the word Generous at the top. Then write down all of the benefits, terms, and opportunities that would feel generous to you. This is really important: think beyond the money. Yes, money is one thing you need to consider. But you might also dream of a 2 year contract that would give you stability. You might wish for longer deadlines. You might want your pick of people to work on the project with you. You might want to secure a cross-promotion deal. You might dream of fewer reporting requirements. Maybe you would like some development dollars up front.
Depending on what you’re negotiating, this list can (and should) vary wildly. And that’s exactly where you need to start. Obviously you won’t ask for everything on this list, but you should always seek to gain maximum benefit from your negotiations. And this is a great way to understand what might be on the table.
What are the actual risks?
When I coach female entrepreneurs, they often catastrophize as they prepare for a negotiation. They worry that if it doesn’t go well, it will go down like a dumpster fire. Their relationship will be ruined. The contract will be off the table. Their reputation will take a hit. It’s just too risky; they should just accept whatever is offered.
Yes, sometimes, the risks are high in a negotiation. I remember when we bought our house. We had already sold our existing home and had less than 20 days to buy and get possession of a new one. When we found our dream home (which happened to be vacant), you can bet that we assessed the risk of losing out and made the decision to put in a much higher bid than we would have otherwise. In the end, it was the right decision. There were 8 other bidders, and we were very quickly going to be without a home. Paying more was totally worth it.
But in most negotiations, the risks aren’t this high. In situations where the other party has come to you, it’s important to recognize that as a positive bargaining chip. They want to work with you. So the risk of starting with a high bid (but keeping your options open to negotiate down) is very minimal.
As you prepare for the negotiation – and after you’ve considered what’s important to them – write down all your fears. List them out. Seriously. Even if they’re ridiculous. And then rate them a 1, 2, or 3. Is the potential for that risk high? Give it a 3. Moderate? Give it a 2. Not realistic? Give it a 1. For the 2s and 3s, go one extra step and write down what would have to happen for that risk to actually be a factor and what you can do to mitigate it.
For example, let’s say I was worried I’d lose a contract if I ask for too much. I might rate that a 2. For that to happen, I’d have to be a jerk in the negotiation and be closed off from negotiating anything down. To mitigate the risk, I’d need to focus on using open language and being willing to make trades. On the other hand, if I were worried that I might be up against other consultants, the risk might be a bit more real – and I’d rate it a 3. To mitigate it, I might decide to lower my price moderately, while at the same time emphasizing and demonstrating that what I offer is uniquely valuable in meeting the other person’s needs.
Study the terrain
Once Mike and I finally got on the trail on the first day, we knew exactly what to expect. We had seen the satellite maps, studied the terrain, and knew exactly how long we’d have to bike up an incline before we got a break. Knowing what was ahead and being mentally prepared for it made a huge difference in our ability to hit our goal. He had just turned 50, and this was a birthday trip – so we wanted to do “50 km for 50 years” our first day out. We rode 52.26 km.
Just like biking on a trail that’s new to you, every new negotiation can benefit from being studied. Consider what you can expect (and what you want) and you’ll be well positioned for a successful negotiation.
I can teach you how to prepare for a negotiation
My Fearless Negotiation for Entrepreneurs course is designed to help small businesses and entrepreneurs ditch their anxiety and know which strategies work. I will help you to prepare for a specific negotiation (or future negotiation) in a way that aligns with your values and helps you to assess the risks.