Getting the deal done is critical to success in business. But there is no single technique for succeeding in negotiations, according to those who regularly close deals.
Ajay Mirpuri is a director of Mirpuri Group, a family-owned holding company with interests ranging from retail and finance to property. He also founded the eponymous bespoke tailoring business, Raj Mirpuri. He says that the two operations face different types of deal negotiations – and, as a result, he deploys different strategies.
“You can’t be an entrepreneur without being a star diplomat and a negotiator,” he says. “One negotiates waking up every morning.”
In the family business, he finds himself negotiating to buy other businesses, where he and his colleagues have to convince the person selling that they are getting the best possible outcome. It is often a case of finding a way of getting something in return for a key concession, Mirpuri says.
In a recent deal, the main sticking point was the fact that the vendor wanted the right to keep his name on the building where the business was based. He also wanted to maintain some sort of legacy in the company he had built.
“Whilst shaving, I thought to myself about vendor financing,” Mirpuri recalls. This was something he had used before in deals – although it was at first hard to see how this could be of use since the Mirpuri Group was not in need of additional funding.
What this financing could provide, however, was a way to reduce the cost of the deal to the Mirpuri Group, Mirpuri reasoned. This is what they agreed, with Mirpuri allowing the seller to keep his name over the building for a further 10 years, on a licence, in return for financing 20 per cent of the purchase price over 10 years at minimal cost.
“The deal was done swiftly thereafter,” Mirpuri says.
At his tailoring business, however, Mirpuri is often negotiating with suppliers, advertisers, and even his employees at times. This requires a different approach, he says – akin to poker and the appetite for risk.
For example, he recently struck a deal for an advertising contract by asking to be billed at 50 per cent of the rate each week with the option to top this up every three months as and when the business could.
This was not because of any concern about hitting the company’s revenue targets, Mirpuri insists, but because he valued the flexibility to do other things in the short term.
“Negotiating from a position of strength is always better but isn’t always the case,” he says, adding that he believes The Art of War, the Chinese military strategy book by Sun Tzu, is a great guide for any negotiator.
“Your reputation and past history are key to your ability to successfully negotiate a deal in any circumstance,” he adds. “Compromise goes hand in hand – and one thing I have learnt is to always ask for more.”
Often, it is the small things in life that can have the greatest effect in negotiations.
Ken Deeks is a director of public relations firm The Amber Group. A couple of weeks before a discussion with a client about renewing his contract, he went to a football match in which the client’s favourite team, Liverpool, was playing.
Deeks bought a programme for the princely sum of £3 and gave it to the client when they next met.
“He was delighted,” Deeks recalls. “It showed that I was thinking of him, that I’d taken an interest in him as a person, and that we shared a common interest. It was also small enough to be seen as a genuine gesture rather than an attempt to curry favour to gain a better contract.”
The contract was subsequently renewed.
Simon Orme has been a negotiator for many years. At his current business, Simon Orme & Associates, which helps technology companies develop and implement growth strategies, he claims to be doing about ten significant deals a year. However, in the past, he was doing a deal a day.
His rule for any negotiation is to have what he calls “blue lines”, upon which he is willing to compromise in return for something else, and “red lines”, upon which he is not willing to budge.
He then spends time before each negotiation deciding exactly what it is he wants in return if he has to compromise on any of his blue line issues.
“When I am negotiating on the price for a solution, I may be willing to negotiate on expenses for travel and accommodation for the time on site, but I will ask in return for permission to use the customer’s story as a case study or better terms of payment,” Orme explains.
“Where I see people going wrong in negotiating is people starting with the worst case then trying to protect it. I go with an optimum case and then I am willing to give some ground.”
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