A few months back one of my students visited me. He had recently read the best-selling book, Blue Ocean Strategy. I had strongly recommended the book in one of my classes and, on my recommendation, he had purchased it and invested his time in meticulously working through the concepts. Yet on finishing the book he felt lost, despondent and overwhelmed.
He and his older brother had recently bought a struggling independent coffee store which they wanted to transform into a viable, thriving operation that would enable them to pursue their passion for music with a sustainable income. He complained that concepts in Blue Ocean Strategy seemed foreign and unrealistic and he wondered why I would recommend such a ‘pie in the sky’ book. Just a few days earlier I had met up with a friend from my MBA class. She was involved in launching a new social networking application that has the potential to transform the way we interact online. She explained to me how the same book had helped her create a practical and relevant blueprint for designing and implementing her new innovative product. She described in great detail how it was the “most valuable and insightful book” that she had ever read.
Why does one entrepreneur interpret Blue Ocean Strategy to be ‘pie in the sky’ while another interprets it to be the most valuable and insightful book that they have ever read? The answer lies in this simple statement: Not all entrepreneurs are the same. The term entrepreneur is used to describe any person launching and managing his or her own business, but in reality there are many different types of entrepreneurs. The ingredients for entrepreneurial success are very different depending on what kind of entrepreneur you are. It is hugely valuable for a person launching and managing a business to understand what kind of entrepreneur they are and to align their actions with the principles that govern that kind of entrepreneurship.
So what kind of entrepreneur are you and what does that mean for the way you manage your business? Some of the research that I have done would suggest that there are four broad categories of entrepreneurs: survivalists, lifestyle entrepreneurs, growth entrepreneurs and revolutionaries.
Survivalists are in business merely as a means of economic survival. They operate micro enterprises to feed themselves and their families. They create very little long-term wealth in their operation; they are merely keeping the business afloat while living on the profits from one day to the next. Examples of survivalist entrepreneurs can be found all across South Africa – they are the basket sellers on Durban beachfront, the people selling sunglasses on the corner of William Nicol Highway and Republic Road and the person selling Stormers flags outside Newlands Rugby ground.
Lifestyle entrepreneurs get into business as a means to a particular lifestyle. Being in business for themselves means that they can live in a certain place, have the freedom to pursue another passion (such as music, sailing, writing) and the autonomy to dictate when they do and don’t work. They tend to engage in higher value activities and use more infrastructure compared to survivalists. They therefore usually need to make a larger upfront investment in the business than survivalists but they get better returns. In most cases these people are forgoing the certainty of being an employee in an existing business for the freedom of autonomy and choice that goes with being an entrepreneur. The owner of a thriving guesthouse in Plett, the coffee shop owner who needs time for his music and the local nail parlour owner who wants afternoons off to spend with her kids are all examples of lifestyle entrepreneurs.
Growth entrepreneurs are driven by the competitive nature of business. They get into business for themselves to create something of long-term value and they continually seek to make the business bigger and more competitive. They usually need to make a larger investment in the business than lifestyle entrepreneurs, both in terms of upfront capital investment and the time they invest in managing the business as it grows. They often take on more risk than lifestyle entrepreneurs but that risk comes with financial rewards if the business succeeds. The consultant who keeps hiring more associates to service more clients, the media entrepreneur who is continuously launching new products to sell more advertising space and the estate agent who is franchising her operation to facilitate growth are all examples of growth entrepreneurs.
Revolutionaries create a business as a means to change the world. They are driven to disrupt and reshape markets. They look to make big bets and if these pay off they usually become famous. Globally, Steve Jobs, Richard Branson and Bill Gates have left indelible marks on the industries they entered. In South Africa, Raymond Ackerman reshaped the retail industry, Adrian Gore disrupted the healthcare sector and Gidon Novick turned domestic airline travel on its head. Such entrepreneurs often need to invest substantial amounts of capital in their businesses to facilitate growth; with that comes high expectation. They are notorious for working hard and for demanding much of those who work for them.
These four kinds of entrepreneurs can be represented in a simple diagram (see figure 1) which depicts the investment required and the revenue generated by the different categories of entrepreneurs. As can be seen in the diagram, survivalists invest very little in their business but they barely operate above the ‘breadline’. Lifestyle entrepreneurs make an investment in their business – usually their own money or money from family and friends. They use that money to create a business that initially grows but after a period of time it reaches a steady state and they are able to live on the income. Growth entrepreneurs typically need to make larger investments in their business and often rely on capital from external sources to facilitate growth. They push hard to grow the business and keep pushing for growth, even after it is making more money than they need for their chosen lifestyle.
Revolutionaries usually need to make very significant investments in their businesses to disrupt a market – Fred Smith of Fedex raised US$100 million in 1971 to create the infrastructure for his overnight delivery service. Adrian Gore ended up owning only 5% of the company he created because he needed to access significant amounts of external capital to get Discovery off the ground. Revolutionaries invest this capital in ventures that have significant potential. If the business takes off it will generate substantial growth and will probably keep growing for a number of years.
The questions every entrepreneur must answer:
My research indicates that there are two key factors that determine whether an entrepreneur is likely to achieve success with their chosen entrepreneurial trajectory.
- First, does their chosen trajectory – lifestyle, growth or revolutionary – align with their personal values and subconscious entrepreneurial desires?
- Second, do they have the skills to deliver within their chosen trajectory?
People subconsciously have a desire to be a certain kind of entrepreneur. This desire is driven by their underlying values – the things that they hold most dear.
Those who recognise how their personal values are driving their subconscious entrepreneurial desires, understand what kind of entrepreneur they want to be and act in accordance with that choice, are more likely to be successful.
Those who fail to recognise how their personal values are driving their entrepreneurial desires risk getting on the wrong trajectory which can have catastrophic consequences. Such people find it hard to align their individual actions with the actions demanded by the business. Being a successful entrepreneur takes hard work, effort and energy, no matter which trajectory you are on. To sustain that hard work, effort and energy, the entrepreneurial journey needs to fit in with the entrepreneur’s life. If your entrepreneurial journey fits in well with your desired life, you will have the energy to sustain what you are doing. If your entrepreneurial journey is out of sync with how you would like to live you are likely to run out of energy.
If your values and desires align with your chosen trajectory, you need to have the skills and knowledge to deliver within that trajectory. If you have the desire but not the skills and knowledge, you may work hard and do everything in your power to try to succeed, but you will continually come up against barriers. Such a person would do well to first develop the right business and entrepreneurial skills before pushing too hard down their desired entrepreneurial trajectory.
So what does all this mean for you?
If you wish to be satisfied, fulfilled and successful on your entrepreneurial journey, follow these three steps:
- Recognise which entrepreneurial path you subconsciously wish to be on – lifestyle, growth or revolutionary.
- Assess if you have the skills and knowledge to be effective on that path.
- Assess if the path you are currently on aligns with where you really need to be and make the necessary adjustments.
1. Assessing your desired entrepreneurial path
Assessing your desired entrepreneurial path involves being brutally honest with yourself. Many people automatically assume that they wish to be revolutionary entrepreneurs – “Wouldn’t it be nice to transform a market and become incredibly rich and famous?” they think to themselves. But when pushed to think about what they really desire, they don’t want the risk, the stress and the endless hard work that goes with building a revolutionary business. You need to go beyond your surface level desires to understand what kind of business will meet your long-term desires and align with your personal values.
10 by 10
One way to do this is to engage in what I call the ‘10 by 10’ exercise. This requires you to get a blank sheet of paper and write down ten sentences describing the kind of life you would like to be leading ten years from today:
- What work do you want to be doing?
- Do you want to be living in a specific location?
- How do you want to spend your days?
- How do you want to spend your weekends?
- How wealthy would you like to be?
- What other aspects of your life do you wish to nurture?
- What would you like to have achieved in the past ten years?
- What assets would you like to own?
- How do you want to divide your time?
- What role will family play in your life?
Be thoughtful and deep in answering these questions. Don’t sell yourself short – write at least ten sentences to create a full picture of what you desire.
Once you have ten sentences outlining your life ten years from today, consider the kind of entrepreneurial trajectory necessary to get you there and whether you are willing to embark on it. Living out each entrepreneurial trajectory has very different implications for your life and you need to figure out if your desired life and your desired entrepreneurial trajectory are compatible. Are you are willing to tolerate the stress and risk that go with being a revolutionary? Are you prepared to put in long hours and hard work that go with being a growth entrepreneur? Are you happy to forgo business growth for control if choosing the lifestyle trajectory? Table 1 provides insight into important elements of each entrepreneurial trajectory. This table can be used to assess if your chosen trajectory is likely to align with your desired life path.
2. Assessing your skills and abilities
The second order of business is to assess if you have the knowledge and skills to execute within your desired trajectory. The knowledge and skills needed to run a lifestyle business are very different from those required to build and grow a revolutionary or growth business. Lifestyle entrepreneurs need basic business management skills accompanied by the specialist skills of the business they are building. Growth entrepreneurs need skills and knowledge related to strategy, marketing, operations and human resource management to be able to find and create new markets, and hire people to manage their business in those markets. Revolutionaries need to innovate and disrupt. They must have the charisma and vision to sell a crazy idea; then, they need to surround themselves with experts who can help make that vision a reality.
3. Assessing your current trajectory and jumping trajectories
The third order of business is to assess if the path you are currently on aligns with where you want to be and to make the necessary adjustments. By carefully interpreting the outcomes of the 10 by 10 exercise and assessing your knowledge and skills, you can ensure that there is alignment between your skill levels, your desired career outcomes and the entrepreneurial trajectory you are currently on.
If there is alignment, you need to strive to be as effective as you can within your chosen trajectory. If there is no alignment, you should identify what you need to change. Do you need to shift your trajectory or develop your knowledge and skills to create alignment? Developing knowledge and skills may require work experience in an industry, attending a business course or doing some deep reading and research. Changing your trajectory involves realigning expectations and taking on the risks and work practices that are associated with a new trajectory. If you want to move from lifestyle to growth or revolutionary, you may need to bring on new partners, spend time crafting a strategic plan to set goals for the business or invest in the skills of the people in the business to create a platform for growth. If you decide to scale down and transition to a lifestyle business, you may need to simplify things, scale back on the risk within the business and realign expectations and work habits.
Understand your needs
Two years ago I shared this framework with a friend of mine. At the time he was trying to create a high growth organisation in the medical supplies industry. He had hired a number of sales and operations people, he was endlessly looking for new markets, new channels and new suppliers, yet he constantly came up against roadblocks. Early one morning as we were driving out to a triathlon together, we chatted about some of these challenges. I asked him what he really wanted from the business he was creating. After some thought he said that he was trying to create an organisation in which he would be in control and through which he would be able to make a good living and provide for his family.
Through this discussion, he realised that he had not properly thought about what kind of organisation he was trying to create and whether that would align with the life he desired. It dawned on him that the only reason that he was pushing so hard to grow his business was because “that is what is expected if you get an MBA.” Over the past two years he has scaled back his operation, reduced the amount of debt in the business, cut the payroll and changed his expectations. He is now taking home more money than before, he is less stressed and he gets to swim, bike or run much more than when he was pushing so hard for growth.
Aligning your deep personal desires with your entrepreneurial trajectory is one of the most valuable things that you can do to enable entrepreneurial success. Start now.
How Feyi Olubodun Uses The Enemy To Create Winning Campaigns
People don’t buy from companies, they buy from people. If you really want to build a successful business, you need to consider the human element in purchasing decisions.
- Player: Feyi Olubodun
- Company: Insight Publicis Nigeria
- Position: CEO
In 2013, the Malaria Consortium approached Insight Publicis Nigeria to help them drive the rapid purchase of Long Lasting Insecticide-treated Nets (LLIN). Ordinarily, this should be easy, given the high rate of malaria cases and deaths in Nigeria — 100 million cases of malaria reported each year, with 300 000 deaths per year. People should buy mosquito nets.
There was just one small problem — in order to stimulate trial of the product, the Malaria Consortium had given away free samples of LLIN — one per household.
Instead of purchasing more nets, families merely put as many of their family members as possible under one net. The Malaria Consortium had unwittingly created a barrier to further uptake.
Here’s what Insight CEO, Feyi Olubodun and his team did: They ran a seven-day campaign promising consumers that they would watch the first live broadcast of a live birth on TV. It was scandalous, and earned hundreds of millions in free media coverage. Government even got involved, trying to shut the project down, so the team had to let them in on the strategy.
Social media became heated, debating the morality of watching a live birth on TV.
Consumers watched a woman, Blessing Madaki, for six days leading up to the birth of her baby. On the seventh day, they watched her being wheeled into the labour room. Millions of Nigerian viewers across the country held their breaths. And then they saw an animation of Blessings’ unborn child refusing to be born, unless his father bought an LLIN. The child’s reason was simple: He didn’t want malaria to withhold him from fulfilling his destiny in life.
- 95% of viewers were willing to buy
- Purchase of LLINs went up over 10%
- 42% of traders said it was a result of the campaign, because 32% of buyers mentioned the campaign at the point of purchase
- Usage went up by 12% and remained high, even after the rainy season
- The client’s objectives had been to raise awareness by 20% and purchase by 10% over nine months. The campaign was a resounding success.
What caused the shift?
Consumers perceived on a subliminal level that malaria was the enemy of the destinies of their children and loved ones. Malaria was the enemy; LLIN the solution.
What can brands do with this? It’s simple. Brands must answer the question: What is the enemy of my target consumers, and how is my brand positioned relative to this enemy?
The success of the LLIN campaign was based on a deep understanding of consumer psyches and the fear triggers that will lead to a purchase.
In his book, Mastering the Complex Sale, Jeff Thull explains that successful sales are the result of navigating the psychology of change, bringing your customers from the positive present to a negative future in absence of your solution. In other words, highlighting the risks of not purchasing. The LLIN campaign is an excellent example of this theory in action.
However, as Feyi and his team soon learnt, while fear can be an excellent motivator, it isn’t always the best way to approach a campaign.
“We tried to use the same approach for another brand and it didn’t work,” he explains. “The team presented to the client and half the client team started crying. It’s a delicate approach to navigate. Fear is a powerful motivator, but you can also strike too deep. This pitch was for an NGO trying to raise awareness for supporting children and preventing infant deaths. Our idea was to ask parents if they’d like to save money for their children’s tombstones — if you wouldn’t do that, why not use the money for something else that preserves your child’s life? But the response was so heart wrenching, it actually didn’t work.”
So, what can you learn from these examples that you can use in your own business and marketing campaigns?
First, fear is a human emotion that can be used in marketing — but it has to be used wisely. “It’s important to remember that although we all love to use terms like consumers and target groups, at the end of the day we are all humans, and as such we have the full complement of emotions that come with being people — fears, hopes, dreams — we need to recognise that humanity when we market our solutions.”
Feyi understands that everything we do comes from a place of happiness, anger, fear or hope — even the most rational business decisions have an element of emotion, from where we choose to spend our money, to who we want to do business with. “One of the campaigns I’ve always loved was a Volvo safety campaign. As the car hit a barricade, the driver’s family’s hands all reached over his seat to hold him in place and save his life — that’s why we wear safety-belts — for the people we love. It was an incredibly powerful campaign, because it tapped into our emotions.”
Understand your customer
Whether your focus is on consumer products or B2B solutions, Feyi believes too many marketing elements are focused on the surface, pushing products. “We need to start looking deeper at the motivators behind purchases,” he says. “Why does your customer buy airtime? Who do they need to speak to? What’s the emotion behind what that airtime allows you to do?
“Marketers shouldn’t be afraid of tapping into emotions. You’re selling to human beings, and that’s why they will buy your products — not because they are consumers, but because they are people.”
But as Feyi’s own experiences have shown, you can’t just push for emotions without really understanding who you’re speaking to. “Businesses need to really analyse their communities: Who are you focusing on? What are their fears? What do they really care about? And how do you figure this out without making assumptions?”
Another big lesson is that the more you can listen to your customers, the more you can subtly adjust your product until you’re offering something your customers really need.
“If you have a product that touches directly on the humanity of your target, you’ve already gained a lot of mileage — media campaigns only amplify what your product already is. They can’t sell something no-one wants — at least not with any longevity.”
Feyi advises that if you have a clearly defined target audience, the next step is to take an ethnographic approach to really understanding them. “You need that,” he says. “If I want to sell to people in Soweto, I need to go and visit Soweto. How do they consume the products that may or may not exist in my category? What do they care about? I need to get a real feel for how they live and work. You’ll be amazed by what you’ll learn simply by immersing yourself in your customer’s environment.”
But take care. Feyi advises that if you take the time to go and speak to people, you need to do so authentically. “I can’t arrive in a rural area in a suit and expect the community to treat me naturally. Respect the community you’re entering, and blend in. Take a participatory approach. You get non-participatory observation and participatory observation, and participatory observation is always of more value in a marketing environment.
“Participatory observation breaks down barriers. Take language for example. Even if you only try and speak a few words of someone else’s language, you’ve already broken down an important barrier. You’re showing a willingness to learn and a respect for the people you’re conversing with.”
This is as true in a consumer environment as it is in a business environment. “If you’re going to pitch to a client, you need to speak their language. You need to understand their landscape and industry.
“There are so many ways to connect with people, you just need to find your similarities. You need to find what touches you both. Find the commonalities in your humanness.”
When Feyi Olubodun, CEO of Insight Publicis Nigeria, one of West Africa’s leading creative agencies, witnessed one too many cases of brands failing in the African marketplace he began to ask himself questions: Why did brands, both global and local, so often fail to connect with the African consumer? What was it about the African market that brand owners were not seeing?
The result of these questions is Feyi’s recently published book, The Villager: How Africans Consume Brands.
The Villager is available on loot.com and at all leading booksellers.
How To Immigrate With Your Family By Starting A Business In The UK
The simple way to make your entrepreneurial dreams come true in the UK.
Many people, especially those with families, are reluctant to up sticks and move to the UK. These would-be movers are often worried that they will not be able to secure employment in the hugely competitive UK job market. This source of stress alone is enough to discourage some from pursuing their dreams of living in the UK. But, there is an innovative and accessible solution.
The UK has several visa classes aimed at individuals who wish to invest in the country. These give an individual the right to live and work in the UK with their families, if they make a defined investment. A visa that interests South Africans is the Tier 1 (Entrepreneur) visa. We have developed our UK Tier 1 Entrepreneur Investment Programme to help South Africans looking to immigrate to the UK alone, or with their families.
The basics of the Tier 1 (Entrepreneur) visa
To be awarded a Tier 1 (Entrepreneur) visa, you will need to invest at least R3,5 million (£200,000) in an existing UK business or one you start up. There are certain other requirements, but these are not particularly onerous, and most investors will qualify if they submit their application correctly.
The entrepreneur visa allows you to live and work in the UK, and take dependant family members with you, defined as your partner and your child under 18. If you have the capital, or are willing to liquidate your assets in South Africa to raise it, the Tier 1 (Entrepreneur) visa is a great way to relocate your entire family to the UK.
Do note: You will need to make specific applications for each dependant, so it is vital you consult with an immigration expert before beginning the application process.
You’re not just immigrating, you’re investing in the UK
By starting or investing in a UK business as part of our programme, you will be granted the right to live and work in the UK, and earn an income from that business.
The business you invest in will want you to play an active role, not just contribute seed capital. If you want to invest in a business without being an active director you will be allowed to do so, but you may not be eligible for the Tier 1 (Entrepreneur) visa.
Another restriction is that you cannot hold this visa and work for a business other than the one you are invested in. But, your partner will be allowed to work in whatever field he or she pleases.
How do you choose the right business to invest in?
There is always an element of risk when investing in a foreign business, particularly when you’re thirteen thousand kilometres away from the country you’re investing in. It’s important to understand exactly what you’re investing in before you take the plunge.
That’s why our UK Tier 1 Entrepreneur Investment Programme is hugely beneficial. It matches your investment capital with a pre-approved investee business. We’ll make sure that your skills are matched with an appropriate venture so you can be an active director of that business.
We’ll also handle your visa applications, providing you with a comprehensive immigration and investment solution. Our partner’s list of investee businesses is over 200 strong, giving you an array of choices in various industries. This allows us to pair you with the business that best suits your investment goals and skills.
But what if you have a successful business in South Africa?
It’s no secret — emigrating from South Africa is difficult for many families who have deep roots and thriving operations. There’s no reason why you can’t keep your business in South Africa as well as relocate to the UK.
Nothing restricts a Tier 1 (Entrepreneur) visa holder from owning and overseeing businesses in other countries while they are on this visa. Many clients choose to relocate to the UK while ensuring that their original business continues to operate. In this way, you will be supplementing the income from your UK investment with revenue generated by your South African business.
You can hold British and South African passports if you apply for your British citizenship in the correct manner. You must obtain permission from Home Affairs in South Africa to avoid having your citizenship revoked. Retaining your South African citizenship will make it much easier for you to continue running a business here.
Talk to us today
There are compelling reasons to move to the UK — a brighter future for your children and a more stable country in which to retire. Our comprehensive solution will ensure you get the most out of your relocation.
If you’re thinking of immigrating to the UK or investing offshore — either or both — we can help.
8 Negotiating Tactics Every Successful Entrepreneur Has Mastered
How you would negotiate if you were talking for the other side? Now you know how your offer looks to them.
Deep down, we’re all a little greedy. We all want the best outcome for ourselves. We can’t help but consider what’s in our own self-interest any time we negotiate a deal.
But to become a truly successful negotiator, you have to learn to put aside pure self-centeredness. Because if all you care about is serving yourself, you’ll blow the deal before you even start.
Negotiations are a delicate balance of give and take. Learning to strike this balance is necessary for any entrepreneur hoping to build a prosperous business. It takes time and practice and whole lot of patience to hone a winning strategy. And yet each deal is unique and needs to be approached correctly, which is why a one-size-fits-all approach will never work for long.
Here are eight of the most important skills every entrepreneur should learn to become a master at negotiations.
1. Do your prep work
Successful negotiations are built on solid prep work. This means you know something about the parties involved, you’ve done a little background checking, you know about their business and maybe you’ve even talked to others they’ve worked with to get an idea of their strengths and weaknesses.
The same is true if you are on the other side of the table and are looking to invest in a product or service. You should have a solid understanding of the pros and cons of the commodity they are selling. The bottom line is, you need to have a good idea of who you are dealing with and what they can offer.
You should always go into negotiations with your best foot forward. You should be well rested. You should have eaten something (being “hangry” can swiftly detonate any negotiation). You should show up on time – maybe even early, so you aren’t walking in feeling rushed.
If you’ve done the above, you should be feeling positive and are going in clear-headed and confident. You will have the stamina and energy to get this deal done.
2. Consider all the details of the opening offer
The opening offer usually acts as an anchor for negotiations. It’s also where the details get hammered out, so it’s important that it’s done carefully and thoughtfully.
The basic elements of an offer include the offer price, the work being proposed, what goods or services are included, when it will all be delivered and if there are any performance incentives, warranties or terms and conditions. Obviously, price is a key component to any deal, but keep in mind the other details. They can matter nearly as much in the long run.
If you are the one initiating the opening offer, this is your chance to set the stage for the negotiations ahead and start with the upper hand. You won’t get what you don’t ask for, so be bold! If you’re on the other side of the table, the offer is key to seeing how close together you are.
Know your bottom line – what are you willing to accept? And remember to take a close look at the details. What else are you getting for your money and what else are you potentially signing up for?
3. Check your ego and emotions at the door
While you should have confidence and assurance because you’ve done your prep work, you also have to check your ego at the door.
Letting your emotions run the show will never serve you well. In fact, you should be going in feeling as neutral as you can about the situation. Leaving your ego behind will free you to think objectively during intense bargaining. You can then negotiate from a standpoint of flexibility.
To be successful you have to be able to think clearly in stressful situations and be willing to work to find common ground. If you walk in with a middle-of-the-road attitude, you’re more likely to strike a balance between getting what you want and not giving away too much.
On the other hand, you don’t want to give something away without getting something in return. Losing your ego and putting your emotions aside will help you find right path forward.
4. Play the game rather than letting the game play you
If you’re entering into high-stakes negotiations, it may be helpful to run through possible scenarios with a friend or colleague.
This will help you feel less nervous, and it may also show you objections to the offer that you hadn’t thought of, or help you see a side of the deal that you hadn’t considered.
Playing through the scenarios, even if it’s just in your own mind, may help you feel less attached to the outcome. In order to treat the whole thing as a game, you should care…but not too much!
Having a little apathy will help you stay neutral and keep your feelings in check. And remember, negotiations are like anything else: the more you practice, the better you’ll be.
5. See your strengths and weaknesses clearly
Self-awareness is key when you begin negotiations. You are essentially looking for the other side’s strengths and weaknesses. Not in a cruel way, but to help you determine your next play.
At the same time, you must also be aware of your own strengths and weaknesses, so you don’t allow yourself to be exploited. Try to take an honest inventory of your strong points and vulnerabilities.
If your company is small, what is its growth potential? Are you able to be more responsive to the market than a larger company? In short, what can you offer that the other side can’t, and what can the other side offer that you can’t compete with? Knowing where you stand on the negotiation chessboard will help you determine how to land the best deal.
6. Know when to walk away
When you enter into a negotiation with the knowledge that you are willing to walk away if things don’t go as planned, you come from a position of strength. That’s why staying neutral is key to a successful negotiation.
You can’t be bullied into a deal if you just leave. But often we tell ourselves that this deal means everything to us. Our ego is involved, and that weakens our position.
It’s about mindset. You have to believe that if this deal falls through, you aren’t losing an opportunity. You are keeping that space open so when a better opportunity comes along you can snag it. If you force a bad deal to happen, you are stuck.
Related: Let’s Make A Deal
You are no longer able to grab hold of something better. And there is no shortage of business out there. So if you are pinning all your hopes on one deal, you may be killing future business.
7. Negotiate in good faith
Whether you’re negotiating a long-term business deal or setting up a quick sale, it’s natural to feel on the defensive when you begin negotiations. We are all protective of our interests and we want to cut the best deal in our favor.
But if you are hoping to walk away with your reputation intact, you need to practice negotiating with compassion and good faith. Engage in active listening and really hear what the other side is saying and asking for. What are the issues that are making them hesitant? Then make sure that you relay your own priorities.
This is the basis of a “win-win” solution, when both sides explore each other’s positions and walk away feeling heard and comfortable with the deal that was struck. Even if it appears that you are on opposite sides, there’s usually common ground to be had. Maybe the other side has a different goal or an opposing position. But if you look for it, you can usually find mutual gains both sides will accept.
8. Know how to close
Negotiations may feel like a game of chance, but they’re more like a game of chess. A successful negotiation requires a good sense of timing and the ability to sense the other side’s next move.
If you’ve done your prep work and are bargaining in good faith, you should have a solid idea of what they’re looking to get out of the deal. And of course, you should have a clear idea of your own bottom line. So you’re either working to bring the sides progressively closer, or the deal is going nowhere.
Ask yourself what the endgame is. Can the difference between both parties be split? If both sides are close but a few numbers are hanging up the process, what will it take to shake things loose?
If you can strike a bargain that makes sense, it doesn’t need to be perfect. It just needs to work for both parties involved. If you can get to that point, you have set the stage for the final handshake. If not, you have to be willing to walk away knowing it just wasn’t the right time.
This article was originally posted here on Entrepreneur.com.
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