A business broker’s perspective on negotiating for non-negotiators

As business brokers and business valuation experts located in Columbia, Maryland and Princeton, New Jersey, we do a lot of negotiating.  This article is part of a series on negotiation.

Click for the First Article,  Click for the Third and Final Article

Connect with Harvest Business Advisors today – email info@harvestbusinessadvisors.com or call 443.334.8000

We often fail to get what we want in negotiations because we do not decide what we want (and do not want) in advance.

Clear Thinking: The next reason we often fail in negotiations is that we do not know what we want to accomplish prior to the conversation. Comments like, “gee I wish I had offered more” or, “now that I think about it I should have tried to keep him harder” may indicate that problem. In many negotiations it is very hard to separate our emotions from a rational assessment of the facts. We fear losing things that appear important to us. We tend to undervalue getting things that might be easy. At this point, you’re just negotiating with yourself, not where you want to be. When you combine the lack of planning with emotion and emotional responses to situations it is a wonder people ever get what they want through negotiation.

The most effective solution to this is simple but not always easy. At the start of a conversation know what your goal is, where you want to go. Also, know what your bottom line walk away point is.

Yes, plan for your negotiation or conversation. If you are not ready, buy a little time. There is very little that must be decided this second. If you find yourself in an important negotiation and you have not planned, or if upon inquiring about the wants and needs of the other side you realize your earlier planning may not be on point, ask for a break to think. Depending on the situation you might ask for 10 minutes or perhaps a few days. Whatever is appropriate, ask and then plan. Step back, let your emotions cool and decide. Be careful about adjusting your walk away line unless it really is a different situation than you thought. I saw many companies take very large losses in 2010 and 2011 from exceptionally low bids made in 2009. The logic was bid low and make up the lack of margin on volume. Unfortunately all anyone did was lose money. A clear example of why you should not lower your walk away line.

Once we know what we want and what the other side wants we can begin negotiating. There are many “techniques” to negotiating. Some techniques are quite effective and really just ways to communicate clearly and others are cheesy tricks and of little use particularly in long term relationships.

Take away: have clear objectives including your downside walk away line which provides discipline and focus in negotiation.

 

This article was written by Gregory R Caruso, Esq., CPA, CVA

Harvest Business Advisors
Business Brokerage, Business Valuation
gcaruso@harvestbusiness.com

 

 


Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at info@harvestbusiness.com or 443.334.8000 to discuss selling your business, ordering a business valuation or buying a business.

Sustainable Value; Business Valuations and Business Brokerage

The creation of sustainable value or a sustainable competitive advantage is the key to increasing business value and simplifying your business brokerage process.

Let me explain.  Sustainable value is business value that can be projected into the future with reasonable certainty.  Sustainable value is created when revenues and profits are based on processes or sales systems or other methods or assets that can be protected and sustained beyond simply, “working harder”.  The problem with working harder as a sustainable competitive advantage is that eventually you might slip or someone else might even work harder than you.  Working harder has a sad history of not being conveyable to the new buyer.

Want to know more?  Please click here for the downloadable e-book. “7 Things You Must Know Before You Order a Business Valuation” 

An example of  sustainable competitive advantage and sustainable value is the home computer printer industry.  Computer printers for home (and many office versions) are sold very cheaply because the profits will be made selling refills.  Those printers that have been sold guarantee that a certain amount of print cartridges will be sold at a very high profit.  This is one form of sustainable competitive advantage and sustainable value.

We advise every business owner to look at their business and determine what their sustainable competitive advantage is or could be and then to develop it.  Through years of valuing businesses and selling businesses as a business broker I can assure you that having a sustainable competitive advantage will make your sales process easier and generate a higher price for your business.

Gregory Caruso, JD, CPA, CVA
Harvest Business Advisors
Business Valuation, Business Brokerage
Princeton New Jersey, Columbia Maryland
gcaruso@harvestbusiness.com
 

 

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