When should I stop negotiating?

Monday, December 22nd, 2008

Dear Norm:
For eight months I’ve been negotiating a licensing agreement with a company to produce a toy I’ve invented. The process has been painfully slow. I’d send a proposal in; the company would ask for changes; I’d compromise; the company would ask for more changes; I’d compromise again. At one point, my contact insisted on taking the contract to a lawyer—who tore it apart. So we started all over again. After several more months of this, I received a fax demanding a whole new set of changes. I couldn’t believe it. I’m beginning to think that my negotiating partner isn’t serious. Whenever we get close to signing, he comes up with more stuff to change. At what point should I give up and move on to another manufacturer?

Dear John:
You shouldn’t be surprised at what’s happened. Good negotiators always try to get the best deals for their company by taking as many bites of the apple as the other party will allow. Your problem is that you let the other side set the ground rules. You should have insisted up front on separating business issues from legal issues and not letting lawyers raise business issues after they’ve been settled. I’d advise you to tell your contact something like, “I’m sorry, but I’ve gone as far as I can at this time. I still think that your company is best for my product, but you’re leaving me no alternative other than to look elsewhere. Maybe I’ll find out I’m being unrealistic. If so, I may come back.” If the guy says you can’t come back, he probably wouldn’t have done the deal anyway.
Yours truly, Norm

Permalink  |  Posted in Negotiation

When should I make the next move in negotiating a deal?

Monday, December 15th, 2008

Dear Norm,
I’ve often heard that there’s a point in every negotiation when the next person who talks loses. I’m trying to land a large account I want very badly. I’ve made a proposal, and my contact has passed it along to his financial people. He’s supposed to come back with a counteroffer. I’ve called him twice, and he hasn’t had the information. I know that he thinks we can provide his company with savings it can pass along to its customers. He was planning to give one of his customers the savings info at a meeting coming up shortly. Should I call him before the meeting or wait for him to make the next move?

Dear Daniel,
If I followed that rule about not talking first, there would be dead silence in many of my negotiations. I don’t think you should worry about losing the negotiation as much as landing the customer—if not now, then later. The question is, why isn’t your contact calling you back? Some people are embarrassed to deliver bad news. You need to make it easy for them, or you’ll never find out what the problems were. If I were you, I’d wait until the deadline passed and then leave him a voice mail saying, “I realize the meeting was yesterday, and I just want you to know that we’re still interested in working with you in the future, even if the answer on this deal is no. So please give me a call.”
Yours truly, Norm

Permalink  |  Posted in Uncategorized

Can I start a business despite having no business training?

Monday, December 8th, 2008

Dear Norm,
I’m an entertainer and a tennis professional with a sports-education business, teaching tennis through on-court musical tennis shows and specialty clinics. I want to grow the company, and I have the passion and the long-term vision to do it, but I don’t have a business background. Do I have time to become a businessman, or do I need to find people to grow the business for me?

Dear David,
My guess is that you have many more business skills than you give yourself credit for. You have customers, don’t you? You must have selling ability and marketing ability, and those are two of the most important skills a businessperson can have. OK, so you may not know accounting. That doesn’t mean you can’t learn the numbers, and it’s the numbers you need to know, not the technicalities of accounting. My advice is to go ahead. There’s only one way to acquire business experience: you have go out there and take your lumps. You can’t succeed without trying. At worst, you’ll get a great education for your next business.
Yours truly, Norm

Permalink  |  Posted in Business Success, Startups

What numbers should I be getting from my financial controller?

Monday, December 1st, 2008

Dear Norm,
I’ve reached a stage where I need to graduate from using two part-time accountants to having a full-time controller. As I get ready to make the change, I’m wondering what numbers I should be watching on a day-to-day basis.

Dear Gary,
Every business has its own critical numbers, and my guess is that you already know what yours are. How do you tell whether you’re having a good week or a good month? What happens when your sales drop? How long does it take you to collect your receivables? Those are all simple, commonsense things. Your financial person should be helping you figure out the numbers you need to be looking at and then providing them to you on a regular basis. When you’re interviewing for your new controller, make sure that he or she is up to the task. If you feel as though you’re a little weak on the numbers, don’t be afraid to say so. Put your questions to the candidates themselves. If they can’t give you answers that make sense, don’t hire them.
Yours truly, Norm

Permalink  |  Posted in Accounting