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October 5, 2012

Sometimes No Deal is the Best Deal

Propose

Jeff Cochran

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Have you ever suffered from “negotiation fever”?  You probably have.  It’s where you get so caught up in the heat of making a deal that you lose sight of the quality of the deal.  As an outside observer you may know it’s a bad deal,but since your directly involved you forget about your objectives.

If you ever catch yourself in a deal where any of the following occur, a large red sign should appear.

  • When the other side forces you below your bottom line

If you’ve prepared before sitting down, you know your starting point for a deal and you know your ending point.  This is the point past which you not only don’t want to go, but literally can’t.  At this point, the deal no longer pays out, has a return, works, or makes sense for your side.

 

  • When you have better alternatives than the one proposed

Ask yourself if it’s a good deal by absolute standards or merely as good as it’s going to get with the other party.  If you know there’s another buyer, seller, landlord, tenant, supplier, shipper, or partner with whom you can make a better deal, don’t get drawn into a lesser deal just because it’s the one at hand.

 

  • When you’re confident the other side cannot abide by the terms of the deal

Don’t think you’re the only one who can get seduced into making a deal just because it’s the one on the table.  Make sure that at some point you take a step back and survey the situation.  Can the other side really do what they say?  Can they deliver?  Or will you spend as much time and effort enforcing the deal as you have making it?

 

  • When long-term problems can outweigh short-term gains

Have you ever eaten a fudge brownie sundae because it’s in front of you and then hate yourself in the morning when you get on the scale?  This is a similar situation.  If the terms of the contract are going to become a problem for you in the future, don’t sign the contract so you can get the instant gratification of finishing the deal.

 

 

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