Negotiation Secrets for Small Companies
— Part Two
Doing business with a multinational corporation is a lot like a game of Texas Hold 'em: there's the poker face of the purchasing department, the incessant bluffing from the "real" decision maker, and another shuffle of the deck just when you think you have things figured out. Throw in a few forced bets, and a fold here and there, and you have the typical components of working out a deal with the business giants of the world! The bad news is most large corporations employ these tactics; the good news is you can up the ante with just a few slight shifts in your tactics.
I've been negotiating on behalf of the "little guy" my entire professional career. Like many of you, I've learned my skills on-the-job, one negotiation at time. In fact, I've discovered along the way that about only nine out of every 100 small business people orchestrating deals with multinationals have had any kind of formal negotiating training. Interestingly, those who received training were typically schooled in negotiation skills while employed at a multinational corporation.
In this special report, based on a survey that I conducted in June and July of 2005, I'll share with you the three typical challenges intrinsic to working with sizable organizations, I'll reveal two of the most commonly overlooked impediments to successful negotiations, and then I'll share a few of my secrets for mastering the negotiation process. As an added bonus, I will leave you five easy to implement tactics that will fully engage you in your role as negotiator. I promise you that these tactics will significantly improve your bargaining position, because whether you're aware of it or not, you're holding a potentially winning hand â€” you just have to know how to play your cards right!
The Deck IS Stacked Against You!
As the little guy, it might feel as if the deck is stacked against you, and in many ways, it IS! Thirty-five companies ranging in size from a few employees to several hundred participated in the survey, and 90 percent of them reported similar challenges.
Three Typical Challenges
Time is on a Multinational's Side
The number one complaint reported by respondents was the amount of time involved in negotiating deals with Multinationals. There seems to be never ending, inexplicable delays, complicated by the fact that almost everyone in a large corporation has the authority to answer, "No." Conversely, hardly anyone has the authority to say "Yes." Making contact with the real decision maker-the person with approval authority-often seems hopeless. Not only are big corporations structured to deliberately keep upper management out of reach, the other key players are often so devoted to covering their own behinds, and making the "right" choice for the company, that nothing ever seems to get done.
Pressure to reduce price
A second complaint registered by the survey participants was the on-going demand to provide an ever cheaper product or service. Despite the substantial evidence that superior products and services are being offered at the best value, the role of the purchasing department is to always grind down the price just a bit more. And, unfortunately, in this global economy, there is almost always someone willing to provide the same product or service for less money, even though a lower price doesn't equate to a better value.
While asking for price reductions is a legitimate point of negotiation, perhaps more alarming are ideas that are perpetuated by many purchasing agents, along with the people who train them, that prices are established in a "smoke and mirrors" manner, or that they reflect "some marketing guy's perception of how much the company would like to make that year." This line of thinking represents the joker in the deck of cards. In other words, you can debunk this myth by not giving it any value. It is certainly not my experience â€º nor is it yours â€º that small companies use any of these tactics in setting prices.
Constantly Changing Players
The third most common problem experienced by the survey respondents was the difficulty in developing lasting relationships with purchasers at large companies. Multinationals are constantly reorganizing their departments and the fall-out is that building and keeping relationships is frequently not possible. Profitable negotiations are always built on trust, but the on-going shuffling within companies inherently prevents the building of long lasting relationships. The shifting of roles also provides the latest contact with plausible deniability about any promises the previous person had made, which, of course, acts as another impediment to successful negotiations.
Two Most Underestimated Impediments
While those three complaints were consistently mentioned by the surveyed companies, those challenges are also the most obvious. The next two issues only revealed themselves under the questioning I was able to provide because of my negotiation expertise.
The Poker Faces
When asked, "if you had a magic wand, what one thing would give you more confidence in your next negotiation?" the majority of respondents stated they would appreciate the ability to see past the poker faces. Most respondents felt that despite any traditional efforts of asking the right questions, unearthing the motivation of a large corporation for initiating the contract was nearly impossible. Even after many email exchanges, phone-conversations or one-on-one meetings, many negotiators felt that they still did not understand the decision-makers concerns, while others reported a feeling that there wasn't anyone at the customer company who had an idea how their small company contract will fit into the larger picture. One savvy small business owner told me, "I treat it (negotiations with a large corporation) like an assessment â€” that I am educating the client and not negotiating."
The Least Recognized Challenge
Although the previously described issues of corporate bureaucracy are frustrating, they only mask the deeper issue at hand. The most overlooked, and the most serious mistake small companies make in dealing with a big corporation is believing that the terms and conditions put on the table are non-negotiable. The most successful deals always involve the negotiation of terms and conditions. Remember, unless you are a subcontractor coming in under the auspices of a contract with the Federal Government, terms and conditions are always negotiable.
Even though large companies will go out of their way to give the impression that terms and conditions are non-negotiable, they are, in fact, bluffing. Two small businesses surveyed shared that each of them had walked away from negotiations with Multinationals, only to have those very same companies knocking on their door a few months later! You have to courageously issue counter-offers, as well as explicitly document your terms and conditions.
Continue to Part Two
Jeanette Nyden is the founder and president of J. Nyden & Co., a Seattle based training and professional speaking company. See: Professional Profile of Jeanette Nyden
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Thomas A. Faulhaber, Editor
Revised: March 15, 2006 TAF
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