Wealth

5 powers of successful dealmakers!

By Peter Wink

To be a great dealmaker, you have to know how to use all the powers at your disposal correctly and methodically. (Powers you likely do not even know you possess.)

This is not an area to be taken lightly, so let's get started. First, I want to start out by saying that power is not about coercion, conning, or strong-arming people into doing what you want. True, you may able to get a quick deal utilising 'power' in manipulative fashion. But in the long run, one or all of three things will happen…

1. The person you did business with will warn others to stay away from you, which is sure to kill your reputation in an already overcrowded, competitive environment.

2. The 'other side' will seek revenge on you or possibly take you to court, which leads to less sales and/or a possible costly lawsuit.

3. They will never do business with you again under any circumstance, which means that all the money you spent developing a relationship, now goes out the window.

So as you can see, power can be you worst enemy or your best friend (my choice).

With that in mind, you need to completely understand how to unleash power to your advantage during every negotiation. You also must understand how much power the other side has, as well as predict how they'll use it. This can be tricky, as everyone at the deal table puts on their best poker face. And some players are better than others.

The goal is to unleash and leverage all of your power, while diminishing the 'other side's'.

I'm now going to describe five sources of power you can unleash and leverage every time you negotiate. I've also included several questions you must ask yourself when considering how much power you and the other side really has.

Here we go…

1. Power of options

Options are all of the various choices available to both you and the other side. The more options you have, the stronger your negotiating position.

There are eight power options (and questions) you need to consider.

Purchasing options: Can I purchase this product or service elsewhere? How many different organisations sell this exact or similar product/service? Is it readily available through a number of distributors or retailers?
Timeline options: What is my timeline for finishing the deal? Do I need to make a decision right away? Can I slow the process down? How many days, weeks, months, or years do I have to make this purchase? Will there be a better time to purchase based on market conditions?
Price options: Is this the best price available? Is it less expensive somewhere else? Do I get any benefits by paying a premium?
Quality options: Does this vendor give me the best quality merchandise or service? Can I buy a superior product or obtain a better service at the same price elsewhere? Is it worth the savings to buy a lower quality item? Can I buy it for less? Do I really need this level of quality?
Long-term options: Is there any long-term business potential with this supplier? Is this deal a one-shot sale? Do I need to make this purchase more than once?
Trust options: Do I trust this person? Do I have trust in other vendors with the same product/service? Does it matter if I trust this vendor or not?
International options: Can this product be purchased internationally? Can I buy the product in Japan, China, Russia, or anywhere else for a much cheaper price? Where exactly do I have to buy this product/service?
Supplier options: Does this vendor have any other buyers other than me? Am I the only organisation who supplies this product or service? Do I need to use this supplier? What other suppliers make this product or supply this service?
Always keep several options open: The more options you have, the better position you'll have in the negotiation! And remember to remind the other side of all your other options. (Never tell them what they are…stay vague!) And always seek out new opportunities and keep your eyes open for better deals.

2. Power of risk

Whoever has the most risk has the least power in the negotiation. And whoever has least at stake, is all mighty! Always do whatever it takes to minimise your risk.

Ask yourself the following questions in relation to risk…

Can I truly afford to take this risk? Is this risk potentially too costly? Is there a good chance I'm going to lose everything or a substantial portion of my money?
Do I have the potential of losing more than I'm risking? Are there long-term ramifications to taking this risk?
Can taking this risk devastate my organisation? If I take this risk and fail, will I set my organisation back too much?
How much risk is the other side taking? Compared to myself, are they taking a substantial risk?
Can I recover from the worst-case scenario? If I fail, will I lose my home, retirement, savings, or the kid's higher learning fund? All things considered, am I still willing to take the risk?
Have I taken this sort of risk before? If so, what was the outcome?
What is my gut feeling about taking this risk? Remember to follow your intuition. For most people, this is the greatest guide. Before taking any risk, make sure the “other side” bears the majority.

3. Power of knowledge

The person, who knows the most and executes, has a huge advantage in the negotiation. There are no exceptions to this rule!

Ask yourself the following questions in relation to knowledge…

Do I know enough about the other side to trust them? Have I eceived information from other vendors about past dealings with them? Have I gathered enough inside information?
With the information I have, should I make the deal or walk away? Does the other side know more about this deal than I do?
Have I investigated this product/service in depth? Do I know what a fair price is for this product/service? Have I truly done my homework?
Does this distributor have the highest quality product or service? Do I have knowledge about their competitors and the quality of their products/services?
Does the other side know me very well? Have they demonstrated that they know anything about me or my organisation?
What's their financial situation? Are they wealthy or poor? Is their business large or small? Do they need me more than I need them?
Are they known to be good negotiators and dealmakers? What is their reputation in the business community?

You cannot ever have enough information about the other side. Obtaining mass amounts of information is one of the keys to understanding the other side and getting them to agree to a deal that is right for them.

4. Power of time

The individual or organisation having the most time to make a decision, has the upper hand in any negotiation.

Time can work 'for' or 'against' you. Therefore, it's very important to take time to negotiate major issues before time starts to work against you. By giving yourself more time, you have more options at your disposal. As time ticks away, your options start lessening at record speed.

Haste makes waste!

Let's use an all-too familiar example…a teacher's strike! School boards know to the 'minute' when their teacher's contracts are up for renewal. In most cases, it's the union that's ready to sit down and start negotiations way ahead of time. Many school boards tend to feel they have plenty of time for a quick renegotiation. And what ends up happening? They start negotiating less than three months prior to the opening of the new school year. They run out of time and schools end up opening late. And in many cases, they end up having to give in to the teacher's union out of desperation. Time always seems to work against the school board and every year thousands of students suffer due to these deadlocks.

Ask yourself the following questions in regard to time…

Have I given myself proper time to analyse the whole situation? Do I have a deadline to make this deal? If so, what is my deadline? If not, how much time do I really have? Am I ahead of time or way behind?
Am I being pressured to make this deal right away? Do I feel comfortable with the time I've allowed myself to negotiate for this product/service?
Is the other side on a tighter timeline than I am? Do they seem in a hurry to sign this deal? If so, why are they in such a hurry? Can I benefit as a result?
Can I stall the negotiation? Do I need more time to make an educated decision?
Are diminishing financial resources going to make negotiations difficult for me or the other side?

Time is crucial to successful dealmaking! With the proper amount of time, you'll have more time to strategise, analyse, and act on all of your options. Without it, you're doomed to failure, and will play into the hands of the negotiator with time to make the deal. Whoever has the most time to make the deal usually has the most power in the negotiation.

5. Power of experts

This is leveraging the power of outside experts.

Utilising this power is a must when dealing with issues you and/or the other side don't fully understand. The challenge is to find an expert having both the credentials and the ability to read the situation and its variables properly.

Ask yourself the following questions in relation to outside experts…

This is leveraging the power of outside experts. Utilising this power is a must when dealing with issues you and/or the other side don't fully understand. The challenge is to find an expert having both the credentials and the ability to read the situation and its variables properly.

Ask yourself the following questions in relation to outside experts…

Do they really have a full knowledge of this subject? Have they handled this type of situation before?
What are their educational and professional credentials? Do they have a successful track record? Did they stay objective?
How long have they been involved with this product, service, or industry?
What other organisations have they consulted with? Are any of these organisations similar to yours?
Can they show you samples of their work? Do they have solid references?
Do you trust them? Will you have to oversee their day-to-day work, or can they be trusted to work independently?

As you can see, you have more power at your disposal than you think. And none of it includes manipulation, coercion, strong-arming or anything unethical.

By utilising these five powers, you will have a much better understanding of yourself, the deal and the other side, allowing you to successfully close great deal every time.

And that's advice you can literally take to the bank!

Peter Wink is a negotiating expert and bestselling author of Negotiate Your Way to Riches and Buying Secrets Retailers DON'T Want You to Know About. www.buyingsecretsretailersdontwantyoutoknowabout.com