Start Ups, Freelancers, Digital Nomads, & Giggers -- this is for you.
In every negotiation there is a balance of power. Someone has a stronger position – the other side is weaker. Don’t automatically assume that the bigger or richer counter-party automatically has a stronger hand.
Analyzing the balance of power is more about alternatives than brute force. The best way to judge the power balance is to look at who needs the deal LEAST. The one who can walk away from the table with less damage, loss, and inconvenience is in the stronger position.
There’s always a power balance, but you are not always on the right side of it. This is especially true for younger negotiators, and those working as freelancers, start-ups, giggers, or digital nomads. Sometimes you need to figure out how to even the odds – and sometimes you have to learn to win from weakness.
What are the sources of Power?
There are 3 general sources of power for negotiators:
- Alternatives and Options
- Resources and Network
- Knowledge and Analysis
Alternatives & Options
When will you walk away from the table?
Having a good alternative is the best and clearest source of power. The easier it is for you to stand up and walk away from the table, the more power you have.
BUT – there is a huge difference between HAVING another offer and LOOKING FOR another offer. If you have a solid Plan B in your pocket already, then you have a high BATNA and are free to go to town like a drunken pirate (if you so desire). Some negotiators have been very successful bluffing (i.e.: business lying), but that is risky, and is an individual choice.
The one who needs the deal less is going to win.
Your main power: your ability to walk away.
A good Plan B is a crucial source of power for 2 reasons. First, it gives you the power to walk away from the table if the terms aren’t favorable. But another important benefit is that it clearly and effectively sets the floor of this negotiation. You know exactly when to get up. That clarity and confidence gives you a huge boost when you are locked in a competitive negotiating session.
The best negotiators always give off a vibe of walking TOWARDS a better deal – not merely walking away from this deal.
Resources & Network
What’s your superpower?
Resources, network, specialty, unique IP, skills – all of these things enhance your negotiating power, though not in the way you think. If you wait for the other side to actually recognize the full value of your abilities or services, then you are in for a long wait. But your resources are valuable for attracting the right kind alternative counterparty, and for being able to solve a wider range of client problems.
What differentiates you from the competition?
How does this help him?
Every negotiator is motivated by his own needs. He has goals to hit and strategies to execute. Good negotiators figure out how to package their specific skills & resources to address the needs of the guy across the table.
Pro tip: Boost the perceived value of your offer by crafting an integrated solution. The more he is managing the agenda, the weaker your position.
Knowledge and Analysis
Is he motivated by Hope or Fear?
We humans sometimes overestimate our own depth and complexity. The vast majority of business decisions are motivated by either Hope or Fear. We are driven to get bigger, better, and richer, or we are protecting ourselves from threatening forces. Now, here’s the important catch: for each decision it is either one or the other – not both. Your counter-party may feel both hope and fear about his business in general terms – but when it comes to this deal, his logic will be driven by either fear of loss or expectation of gain.
Once the negotiation starts, all of your effort and analysis should center on the Hope-Fear influence decision chain.
Why is he in the room?
If he is motivated by Hope, then he wants to use your services to do more of what they are already doing. Your offering should be bigger, faster, and newer –but moving in the same direction as the firm is already moving.
If he is driven by Fear, then he probably wants to use your services to fix a problem, turn a trend, or comply with someone else’s agenda. He is looking for solutions that are cheaper, quicker, or bring in an outside perspective.
Boosting Your Power:
- More alternatives -> More power
- Is he buying from Hope or Fear?
- Demonstrate that you will improve his situation
– Allay his fears, or feed his greed.
Negotiating power arises from your ability to get up and walk away from the table – but you have to shape the perception of what you are walking towards.
FlashPoint explainer video (2min)