December 28, 2005Volume 4 Number 52 Issue 87
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Negotiate Everything

Today, I thought that I might write about something I have spent the last 35 years perfecting - negotiating a deal. I have been and still am on occasion, a union negotiator. I have negotiated many significant deals in the course of my career, and developed a high degree of expertise in the area. I use these skills at every opportunity, and I believe that some of them are invaluable for the small business person.

My definition of negotiating - “Making the impossible acceptable.”

Negotiations usually happen when you are willing to part with something in return for some consideration from another person.

The average person enters into several negotiations every day. Most people just don’t recognize these experiences for what they are - a chance to make a better deal. Beware though, your spouse will not react too kindly if you start negotiating every aspect of your life together *8>) You need to realize, that sometimes taking an opportunity to negotiate a situation does not mean getting what you want.

Sometimes a request to run an errand is just that. A request for you to run an errand. Sometimes, however, it is a chance to bump the situation up a bit.

    Example:

    Q: “Honey, would you take these things to the drycleaner?”

    R: “Sure. Would you ... (doing whatever it is that you need) while I’m gone?”

This type of negotiation is rather simple, direct and is low risk if done correctly.

The most important aspect of any negotiation is the preparation. If you know that your spouse hates bathing the dog, washing the dishes, etc, then you would be very careful about trying to make a deal that entails your spouse doing these things.

More complex situations require more planning. You must know whereof you speak. You must read, study, question experts, whatever you can do to become knowledgeable about the area in which you wish to negotiate. You must know what is possible, what is probable, and what is usual in the situation. An example of this that currently comes to mind relates to negotiating a union contract. Two unions represent workers doing basically the same work for the same employer (complicated but workable) and had been paid the same rate for years. During the last two rounds of negotiating, “the other guys” have not consulted with us nor researched our current agreement. This has meant that they got 100% of what they asked, and our members who only got 70% of what they asked. Our members are however, now receiving between seven and ten dollars a day more than their members - and they ratified their contract after ours! If you do not know the current situation, you will never be able to decide what is possible.

Always keep in mind, that the effort required should bare some relationship to the benefits you hope to derive. Spending two hours on the internet every night researching hotel room prices in order to save $5 a night on a two-night stay is counterproductive. However, knowing that the first price some reservation clerk offers is seldom the best one could save you money quickly and easily.

For example, my wife and I were travelling to Florida some years ago. I called a hotel I wanted to stay at and asked for the rate, and was quoted $280 a night.

I immediately replied, “Don’t you have any deals going on right now?” This earned me an immediate reduction to $140 a night. Not bad for eight simple words. I then squeezed one more time with, “(My employer) doesn’t pay me that kind of money!”

To which the reply was, “Oh, for that group, the price is $70 per night.” Not bad, for a total of 17 words, I saved $210 a night for 10 nights. A little more than $125 per word.

You could substitute, I work for the government, I belong to ARP or AAA, etc. Just because the price is given, whether written down or not, does not mean that you need to pay it.

The second most important aspect is setting and knowing your own limits. If you don’t know what you willing to pay, give or provide in the exchange, then you cannot ever know when the deal is right!

My wife and I were in “the big-city” on holiday one time, and our hotel was next to a new car mall. We had some spare time, and since we were just starting to think about a new vehicle, we wandered over and kicked some tires. A sharp salesman came over, talked to us a bit, even after we told him that we were not from the big-city and unlikely to buy from him. After a little bit of argle-bargle, he gave us what he said was a very good price on the vehicle we were looking at and told us he would hold it for 48 hours.

He knew from our conversation that we were unprepared to buy, because we didn’t know what we were willing to pay. The 48-hour time limit gave us enough time to get prepared, but not enough to shop around a great deal - very smart on his part. When we got home the next day, I visited our local dealer and bargained ferociously with a sales rep. The best price that I could get was more than $2,000 higher than the big-city quote. I checked with a two other dealers in nearby towns, talked to my banker, checked the web, and determined that the big-city price was excellent.

I called the big-city salesman, told him his price was competitive (note; I didn’t tell him that he was the lowest by far ) and that if he could make it worth my while to fly down and drive back, we could probably make a deal. He cut another $1,000 off the price, agreed to register my new vehicle, fill the tank and pick me up at the airport so that I could be away quickly. We made the deal!

Not bad, I saved $3,000 for investing $350 and two days of my time.

You can make good deals also if you follow these steps:

  1. Be prepared - before you buy, sell or trade, have a good idea of the value of the items involved.

  2. Know what will make a good deal for you, and also what is the worst deal that you are willing to live with.

  3. Never let the other party know how badly you want his/her item.

  4. Ask for a better deal. Do this more than once.

  5. Be prepared to walk away if you don’t get the deal you want, or are prepared to live with.

I am just warming up, and I see that our time together is up for today. Maybe I’ll pick this up another time.

My family and I enjoyed a wonderful Christmas, some here, some elsewhere, but always in one another’s thoughts.

Trusting that you and yours will have had a wonderful Christmas, I remain

warmly,
Jim Green

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