Negotiations Can Improve Your Success
Entrepreneurs and startups face an uphill battle as they launch. That’s not surprising, because statistics show that 80-90% of them will fail. Against these daunting odds, entrepreneurs must not only be innovative, but determined to succeed not matter what happens.
And, according to Samuel Dinnar and Lawrence Susskind’s book, Entrepreneurial Negotiation, the biggest threat they face is an inability to negotiate.
That grabbed my attention; so I followed-up to discuss the findings with Samuel Dinnar. Samuel is the president of Meedance, a negotiation and dispute resolution service, and an instructor at the Program on Negotiation at Harvard Law School.
“Entrepreneurs need to treat negotiation as a critical skill.” -Samuel Dinnar
5 Factors of Entrepreneurial Negotiations
What are “entrepreneurial negotiations” and how are they different?
In the research for our book, my colleague Lawrence Susskind and I interviewed many entrepreneurs from diverse industries and backgrounds. We found that in entrepreneurial negotiations several factors, that may also exist in business negotiations, are always elevated, often to an extreme. They are complexity, uncertainty, relationships, egos, and emotions.
Moreover, the entrepreneurial leader needs to negotiate for everything throughout the life of a startup and especially in the very early days, when the future company is just an idea or in the seed stage. On the other hand, when a corporate leader (whether a manager or an executive) is tasked to run a project that brings a new product to the market, for example, that manager will usually be given a budget and a team to work with. The entrepreneur leader continues to negotiate for resources that are beyond his or her control throughout the life of a startup. He or she will need to sell the “vision” to potential employees who might not get paid in the beginning as the company is being formed, or to negotiate with investors to invest their money in the company that has yet to deliver anything, or to convince the customer to buy a product that does not yet exist from a company that may not even be around a year from now!
As action-oriented leaders, entrepreneurs are constantly on the move. How does this affect negotiations?
Many entrepreneurs are hard-working action-oriented leaders who know how to make quick decisions and move swiftly based on their intuition. Trusting their intuition and instincts has made them successful so far, but there is a danger in that. Some of the habits that made them successful may actually backfire when used at a later stage, once the company has grown. For example, raising money from an angel investor is a very different process of negotiation than the one used with a later-stage venture capital firm. Some entrepreneurs will make the mistake of working alone without seeking enough advice, while others will make the mistake of compromising too quickly, without exploring how to create more value, so that they can go back to doing what they prefer such as developing a product.
“Some of the habits that make entrepreneurs successful in the beginning may backfire when used at a later stage.” -Samuel Dinnar