Mistake & Fix #2: Entrepreneurs Are Overly Optimistic and Overconfident. Most entrepreneurs are supremely confident. They believe strongly that they will be successful (despite well-known statistics regarding failure rates). Because of this overconfidence, many fail to incorporate appropriate contingencies into the agreements they sign. Be sure to pack a parachute and sweat all the details. Even if it takes you longer to close a deal or get the results, time and being deliberate can work in your favor.
The two professors added, “Preparation is one of the keys to successful negotiation. If we prepare well, we are actually engaged in mistake prevention. Preparation means focusing on interests, opportunities, risks, obstacles, and potential moves, including those ‘away from the table,’ with the other side or with other parties. Prevention also requires rehearsal, to transition both physically and mentally from theory into practice. ” I always make a checklist. You should too.
Mistake & Fix #3: Entrepreneurs Need to Win. The primary objective of many entrepreneurs is to win. They are often primarily concerned about besting their counterpart and thus treat negotiations as one-off interactions, disregarding the possibility that future deals might be even more valuable than whatever is on the table at present. Always look forward and plan for distant scenarios. One of my own rules is that decisions often set lasting precendents. Think deeply about the long-term consequences before making important decisions and deals. That’s the perfect roadmap.
Mistake & Fix #4: Entrepreneurs Are Too Quick to Compromise. Entrepreneurs are “doers.” They try to get things done while operating under incredible pressure. They feel compelled to decide quickly and “move on.” Instead of exploring additional options and finding even more advantageous trades, they settle for quick (and minimally acceptable) solutions. A quick reminder. The quickest solution is not often the best outcome. Make sure to take a step back. It’s o.k. to take a timeout.
Mistake & Fix #5: Entrepreneurs Work Alone. When entrepreneurs let their independent spirit dominate the way they negotiate, they prepare alone (rather than consulting their stakeholders and advisors), misread unfamiliar signals, take unreasonable stands, or vent emotionally at inopportune times. They fail to recognize that negotiation is an organizational, not an individual, task. Use this mistake to your advantage. Engage your team. If you’re just starting out, go to the outside to get help.
Mistake & Fix #6: Entrepreneurs Haggle. Many entrepreneurs get “tunnel vision,” assuming that the only thing they’re negotiating is price. This leads them to take a series of aggressive positions along this one dimension, forgetting to consider other factors that can create significant value. Dimmar and Susskind advise to “consider multiple perspectives even if they clash” including “taking a team member with you who you can talk to during breaks and between sessions.” In today’s world, you can text team members during a meeting to make sure you’re on the same page or to get additional perspectives.
Mistake & Fix #7: Entrepreneurs Rely Too Heavily on Their Intuition. Many entrepreneurs rely on their instincts when a negotiation doesn’t go as planned. But when trusting their instincts, they are not as reflective on what they are doing and why. So, they end up blaming the other side when things to wrong. Worse, these same problems keep occurring because they fail to learn the right things from their experiences. This is a personal opportunity to note “mistakes and gaps” in your own thought process. Use it as a learning experience about what not to do.
Mistake & Fix #8: Entrepreneurs Deny Their Emotions. Most entrepreneurs have a strong sense of what is fair. When they feel they are being mistreated, they fall prey to a slew of emotional mistakes, or cognitive biases, that allow ego to overrule logic. This can be especially problematic for entrepreneurs who tend to deny the relevance of emotions (and ego) in negotiation. While claiming “it is just business,” they can overvalue formal power, leverage, and control and undervalue the more subjective side of business negotiations. Take emotion out of the equation
The bottom line is how you understand and manage your business relationships will determine your entrepreneurial success.