Low-down on Negotiations (Part II)

And now on to part II ...

Basically, there are 3 main elements of every negotiation. These can be easily remembered using the mnemonic TIP - Time, Information and Power.

Time - This refers to the amount of time you have to close a deal. Generally speaking, the side with the tightest deadline is one hanging on the short end of the stick. If the other party has a tight timeline to work with (due to their superiors, financial positions or external conditions), playing the delay card can force them to make a favourable settlement in your favour at the last moment. But this only works if they absolutely have to close the deal. Likewise, it would be wise not to reveal the deadlines that you may have for your schedule and play it cool during the negotiation process even when you know you need to settle the deal soon.

Information - Knowledge is power and this old adage weighs especially well in negotiations. In some sense, one needs not only to know what the opposition needs/wants/fears/can give up/cannot give up, but also needs to know oneself well. What this means is that before entering a negotiation stage, one should always at least set out the parameters of the deal into a list of items that are must haves and which are nice to haves. From experience, I have seen a lot of people going into deal-making without knowing what they even want to achieve. And frankly, this just translates into a tremendous waste of time for all involved. On the flip-side, one should also try to find out or deduce what the other party has up his sleeves and which of items they can give up and live without.

Power - Here, power does not mean actual power per se, but perceived one. A lot of people commonly mistake this negotiating element to equate to financial, postitional status or otherwise. However, this is not the case. For example, if a common businessman has a multi-billion dollar deal for millionaire to invest in, you can guess where the perceived power lies. Personally, I've also seen situations where people with pretty good and interesting deals just shrivel up in front of people they are pitching to because they believed that they were just small fries to someone richer and more powerful. This is not the case as the one last shred of power that virtually everyone at the deal table has is the power to say no and walk off on a bad deal.

So, these are the 3 parts of deal making that you can watch out for and prepare and work on. Hopefully with enough practice, they would become second nature to you as a negotiator soon.

( to be continued ...)