By Chris Myers
Entrepreneurship, and arguably business in general for that matter, is all about the art of the deal. Whether you’re hiring employees, selling your product, or raising capital, deals are what make the world go ‘round.
Deal making is equal parts euphoric and depressing. The roller coaster ride that accompanies most deals, regardless of the amount of negotiation involved, is often too much for people.
I’ve seen sure things collapse at the 11th hour and felt the nagging frustrations that accompany a complex and seemingly never-ending negotiation. The whole process can be draining, both mentally and emotionally.
It doesn’t have to be this way. The best dealmakers I’ve ever met possess the unique ability to float through the process effortlessly, never losing their cool or getting too frustrated when things go sideways. This grace under pressure enables them to close more deals, build deeper relationships, and drive better results.
What’s their secret? Great dealmakers know that every deal, without fail, dies at least three times before it eventually closes.
Once you accept this unavoidable fact of business, you can build it into your process and systematically address the most common factors that cause a deal to die, either permanently or temporarily.
Reason #1: Common misunderstandings
The most common, and most obvious, reason that a deal dies is that the parties involved fail to understand each other.
This may sound overly simplistic, but I’ve been consistently amazed at how often people have totally different understandings or perceptions of a deal.
When negotiating a deal, never, ever assume that everyone involved has the same understanding of the opportunity. Instead, reinforce the essentials of the deal in every communication. Put simply, it’s impossible to over-explain.
I’ve had many situations where a potential client anchors on one aspect of our value proposition and loses sight of the big picture. Often, this happens when clients are focused on lead generation.
We have a pretty significant network of small businesses using our white-labeled platform. When a prospective client evaluates BodeTree, the desire to tap into that network for the purpose of cross-selling often overshadows the more significant strategic value we provide.
The solution to this, and any misunderstanding is to provide a very structured and articulate value proposition early on. Establishing the “ground rules” and non-negotiable points of value for the deal can provide you with a framework to which you can constantly refer if things start to go sideways.
So, the next time you want to slam your head into the wall because a client “just doesn’t get it,” or a deal stalls out, don’t despair. Instead, calmly reinforce the original value proposition you established early on. Before you know it, the deal will be back on track.
Reason #2: Bad timing or a lack of urgency
The second reason a deal dies an early death is a general lack of urgency. More often than not, clients will blame this on “bad timing” or other “strategic initiatives” that have to take priority.
Nine times out of ten, when you hear these excuses put forth, it’s because the person you’re working with doesn’t see enough value in the deal. That may seem harsh, but it’s the truth.
Offering forth these excuses is the perfect out for a partner. After all, it saves them from having to make a decision but leaves the door open for partnering in the future.
The way to overcome this challenge is to strike the perfect balance between being firm on deadlines and demonstrating saint-like patience.
I recently had a client who was inches away from signing a mutually-beneficial deal, only to put the project on pause at the last minute. Their reason was to conduct a more thorough review of their existing technology infrastructure, but the truth is that my team and I did a poor job of explaining the strategic value we bring to the table.
The deal could have died right then and there, but fortunately, the way we responded brought it back from the dead.
The temptation to respond with a “take it or leave it” response was strong (spoiler alert: they would have left it). However, we resisted this urge and instead extended the deal’s time-frame for another 30-45 days.
The reason for this was twofold. First, it gave the client the room they needed to go through their process. After all, we weren’t going to change their minds once they had made the decision to do the review. Second, it gave us the opportunity to revisit our sales pitch and reinforce the long-term strategic value.
Reason #3: Disagreements over the details
The last “death” that a deal can experience comes at the tail-end of the process, during the final contract negotiations.
While annoying, it’s perfectly common for prospective partners to revisit details of a potential deal at the very last minute. Often, details such as up-front fees and other contract terms are glanced over while the parties hash out the more conceptual issues I described earlier.
These are the most tragic and avoidable deal killers I’ve ever encountered. They’re almost always due to hubris on the part of one or both parties. The desire to “win” or “be right” in a deal often causes people to lose sight of the big picture. When that happens, they respond in a petty and ultimately self-defeating refusal to bend.
The trick here, as with so many things in life, is to humble your pride and bend where you can. More often than not, the details that are brought up are just that: details. Accommodating requests may be annoying, but they rarely change the fundamentals of the deal.
I always advise my team to compromise where they can, but stand firm when bending would fundamentally alter the value of the deal. This balanced approach almost always results in a mutually-beneficial solution to the disagreement at hand.
Always remember: every deal will die at least three times before it closes. It’s up to you to decide if any death it experiences will be its last. If you’re flexible, patient, and transparent, you’ll be able to bring it back to life.
Source: Forbes
