How to Negotiate More Effectively with Clients, Employees, and Investors According to Maya Miller of The Career Hub
Knowing how to negotiate is one of the essential skills any entrepreneur needs to have. But how do you negotiate to achieve the outcome that’s best for you and your startup? Labs mentor Maya Miller, co-founder of The Career Hub, held a session to share her four tips to have more effective negotiations with anyone from potential clients to investors.
Tip #1: Identify your end goals
Before going into any type of negotiation, it’s important to understand what you want to get out of it. Negotiations aren’t always about money—they can be any situation where you and another person have to come to an agreement about something specific. Did you get a lower valuation than you were expecting from an investor? Are you trying to negotiate a compensation package with a new employee? Or are you trying to negotiate the terms of an agreement with a potential client? You should determine your goals beforehand so that you have a clear path with points and counterarguments throughout the entire conversation. “Negotiation is a constructive conversation. I think a lot of the mistakes that are made in negotiation are due to a lack of setting goals,” Miller says. “People always ask me, ‘when do negotiations start?’ And my response is that they start the minute you think about speaking to an investor or client, or are approached by an employee.”
If you approach negotiations without a plan, you may end up having to improvise, which can lead to a lack of clarity for you and the person you’re speaking with. “Even the savviest negotiators improvise, which is a big mistake,” Miller says. “The first thing you need to do is set a clear target. What do you want to accomplish out of this conversation?”
Tip #2: Know your alternatives
Since you’re negotiating with someone who will likely have different ideal outcomes in mind, you should have an alternative contact ready in case you can’t come to an agreement. For example, if you’re negotiating a valuation with an investor and their offer is lower than what you’re willing to accept, be ready to look for another investor whose valuation more closely matches yours. “If you’re going to a meeting with an investor and that investor is your only option, then stress becomes a bigger factor. And when stress is involved, you’re likely to make mistakes,” Miller says. “If you don’t have an alternative, postpone the meeting and work on having an alternative.”
If you do have an alternative, don’t bring it up during negotiations. “The minute that you bring up your alternatives to the room, it’s a mistake,” Miller says. “There’s a term, ZOPA—the zone of possible agreement. The negotiation room is the zone where things are happening. It’s where partnerships can form.” When you mention that you have other options during negotiations, the ZOPA disappears, things can turn sour, and the potential for building on these relationships can quickly evaporate.
Tip #3: Know your strengths and weaknesses
Negotiating can be a big challenge for people who aren’t patient or calm under pressure. If that sounds like you, it’s important to think about how you’ll react during difficult moments in the process. “One of the power sources in negotiation is emotional capital. It means that you have to know who you are as well as who you’re speaking with,” Miller says. “You have to know whether you’re quick to judge. Do you escalate things quickly? Do you get angry? Are you not strategic?” If you have second thoughts about whether or not you’re a good negotiator, try to focus on setting clear goals and expectations for yourself and communicating them clearly with the person you’re negotiating with beforehand. This way, both of you know exactly what to expect before you meet.
Knowing and researching the person you’re negotiating with can also be a big advantage for you. “This is very easy now because there’s a flood of information online. You should know what their background is and know some things about the company they work for,” Miller says. “Everything is out in the open. It’s a big advantage when people do their homework.” When you’re more familiar with the person you’re negotiating with, you’ll be able to have a better strategy, talking points, and goals. For example, if you find out that a client you’re interested in working with only signs short-term contracts but you’re interested in a longer time frame, you can strategize ways to get them to meet in the middle or find another client who’s interested in something long-term.
Tip #4: Have a “variant”
Just like having an alternative investor in mind before you negotiate with any investor, you should also have a variant, or one aspect of your negotiation terms that you’re flexible on. “The more variants you have, the more flexible you can be. For example, if you’re negotiating a salary with a new hire, maybe you can’t give them the salary they want, but you can give them a company car and bonuses,” Miller says. “When you’re flexible with your variants, you’ll have more room for negotiation.”
To set your variants, start by deciding on the most important outcome for your negotiation. From there, work backwards and set a few backup plans. For example, if you’re trying to negotiate a compensation package for a new hire, maybe you’re willing to give less PTO but more equity in the company. In this case, equity is your variant. “Variants can be a game-changer,” Miller says. “Someone may want a black hat or a red hat. But they know that if they get a purple hat instead, they’re okay with it because it’s still a hat.”
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This post is based on content from a WeWork Labs programming session.
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