Negotiation is as unavoidable as it is it feared. In the ideal world of many young entrepreneurs, professionals would handle it all, winning the best deals for your startup and reducing the opposition to rubble. But if your budget doesn't allow you to hire professional help for every negotiation that doesn't mean you can't employ a few of their tricks.
That's the message of a recent post from ex-entrepreneur and current VC Mark Suster on his blog Both Sides of the Table. Recalling the early days of his first business in the late 90s, Suster explains that "negotiating was a subset of every activity in a startup," from getting good terms on your office space to convincing a recruiter not to charge you an arm and a leg. Suster writes that he turned to lawyer Stuart Lander for help.
First, Landers says, it's key to know when you're overmatched and need to call in the big guns.
"Negotiating is part of the training as a corporate lawyer and why you should never negotiate against lawyers unless you yourself have one present," he says.
But if you're negotiating an issue yourself, here's the one peice of advice that will give you a leg up: Never negotiate piecemeal.
In an early negotiation with a potential business partner, Suster moved slowly down a long list of points of contention, hammering out each one as he went. Wrong move, insisted Lander. "If you negotiate piecemeal you end up compromising on everything. That’s not very smart,” Lander told him. Suster writes:
And it wasn’t. It came both from impatience (who wants to go through an entire list and hear issues without debating them?), inexperience and ego.
Corporate lawyers know better. They’re used to negotiating long agreements. Their modus operandi is, “send us all your comments by marking up our entire document.” That is a form of “let’s negotiate in an entirety rather than piecemeal.” They’re even happier if they don’t have to do it face-to-face.
To me, it always seems so harsh. You get back a document that has 5,000 redlines on it. It feels like receiving one big middle finger and I still find it unsettling. To a lawyer it’s just efficiency. They know they’re going to concede on many of those points. But the hassle is … you don’t know up front which ones their client really cares about it and which are BS items designed to wear you down in the negotiation.
The problem with negotiating piecemeal as Stuart taught me is that you trade on every item. You don’t prioritize the issues which you really care about. If you don’t want to give a millimeter on one item you have a hard time doing that point-by-point. Done as a “package deal” you can say, “I gave in on these 5 issues that you asked for. On this issue I can’t give.” That’s much harder to pull off piecemeal.
While this insight might sound obvious to seasoned negotiators, Suster asserts that, "most untrained business people approach these negotiations piecemeal." So if your first impulse is to just go down the list, learn from those Jedi masters of negotiation, corporate lawyers, and resist it.
Looking for more tricks of the lawyering trade? Copyblogger has a handy guide to persuading others like a slick trial attorney. And if you're in the market for more tips and advice specifically for entrepreneurs, check out Suster's enlightening blog.
What other rookie negotiating mistakes do young entrepreneurs commonly make?