Tough Negotiations: What Would Warren Buffett Do?

When it comes to your business, even small negotiations can end up having a big impact on your success. If you feel that negotiating is not one of your talents, all is not lost. Negotiating is not a skill that people are born with. It’s a skill that can be learned, just like cycling or writing reports.

As with any learned skill, you’ll probably get the best results if you learn from an expert, someone who has mastered the skill himself.

And who better to learn from than the famous Oracle of Omaha, Warren Buffett.

Buffett has proven himself to be a masterful negotiator. So much so that authors Tom Searcy and Henry Devries have even written a book titled 'How to Close a Deal Like Warren Buffett'. 

So next time you’re faced with a difficult negotiation, ask yourself, ‘what would Warren Buffett do?’

 

Start Talking About Money from the Beginning

Talking about money can be uncomfortable, especially if you have previously avoided talking about it in a relationship. For example, if you develop a business relationship that centres mostly around the recruiting aspects of your businesses, and then one day you start talking about money when you want to negotiate, the relationship may be strained and uncomfortable.

Instead, start talking about money right from the start. When money is a topic of conversation from the beginning, the relationship is more open and honest, and when you start negotiating, there are no feelings about a change in priorities or false promises.

Know Who You’re Dealing With

The more you know about the financial situation of the party you’re negotiating with, the better off you’ll be. If possible, you should know how they make their money, how they spend it, and the overall status of their financial situation.

Why does the other party want to negotiate with you? If you can answer this question, you will be in a great position. Too often, people go into negotiations focusing only on what they want to get out of the agreement. This narrow-mindedness can limit your possibilities and blind you to risks. But when you know what they’re hoping to get out of the negotiation, you have incredible leverage. You can develop the negotiation in a way that they get what they want, and in the meantime, you’ll get what you want as well.

 

Use Ranges of Numbers

In an attempt to be efficient and open, many people use very specific numbers in their negotiations. For example, they may start out by saying, “We absolutely can’t pay more than XX.” This can derail negotiations from the start because you find yourselves so far apart that there seems to be no point in pursuing the relationship.

Instead, use ranges of numbers. Consider your own lowest and highest numbers that you could possibly accommodate. When both parties do this, they generally find that there is some overlap in their ranges, and this leads to the kinds of conversations that make negotiations fruitful for both parties in the end.

 

Get the Timing Right

It’s tempting to want to tackle the entire negotiation in a single sitting, especially if negotiating makes you nervous. But you’ll find that you get better results if you work out each point of a deal one at a time. It takes time to get the details right and let all the chips fall where they may. Be patient, and focus on one aspect of the deal at a time. 

For help with tough business negotiations, reach out to us at Altus Financial.

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