How to Negotiate the Bottom Line
Published June 15, 2009 | 
How many times have you heard in a negotiation that one of the parties has reached their bottom line and perhaps you have heard the question, what is the bottom line? That is because our society focuses on the “bottom line,” and this fascination has changed the way negotiations take place.
It is important for entrepreneurs to understand that the bottom line, although important, should not be the focus whether business operations or negotiations, and in fact, focusing on the bottom line of a negotiation is a major mistake that could cost you considerably, as the three biggest problems with focusing on the bottom line are burning out too fast, revealing your true intentions, and unknowingly causing other people to focus on your bottom line.
First, when people focus on the bottom line in negotiations, they tend to “burn out” or “peak too soon,” and when people focus on only getting to a point, they expend all their focused energy getting to the point and leave no mental or emotional energy after that point has been reached and once that negotiating objective is reached, they no longer negotiate with the same intensity they had when before reaching the objective.
For example, if a person was told they must run a distance as fast as they can, once the person has crossed the “finish line” they can visibly be seen as losing all forms of energy, and in fact, the loss of energy is clearly visible with all athletes in the track and field sports crossing the finish line, as the moment they pass the line, they immediately slow down with every muscle in their body, and this principle is also based in human nature and basic survival instincts.
In negotiations, the classic example of a person “peaking too soon” is in the automobile purchasing process, as invariably, the car salesperson and manager wear the buyer down to find out what their particular “bottom line” (or in their case, top of the line) price will be to purchase the car, and after the negotiation for the car is completed, the buyer gets this feeling of relief as if he or she finally achieved his or her goal of getting the car at the right price. That person’s mental and emotional energy has been spent, however, the negotiations have only begun, as the salesperson then offers small options such as a security package, a window-tinting package, the under-coating package, service package, and a long term financing program, and inevitably, despite the feeble objections of the buyer as to some or all of these add-ons, the dealer upgrades its profit on the sale of these items. Time and time again, research and experience has proven that there is greater likelihood of selling small extras after the large purchase has been negotiated.
A critical point to always remember is that when people are truly focused on one thing, they may inadvertently give you clear signs that show you the object of their focus, for example, often when people say one thing and are focusing on something else, they will make a mistake called a “Freudian slip” revealing the true object of focus, which many times becomes apparent when they inadvertently mention the object of their focus in the conversation.
The same thing occurs often in negotiations, as a person focuses on the “bottom line,” often they will give that “bottom line” away by their actions, as sometimes the action is a pattern of offers and counter-offers that all point to one number, and other times, it will be a slip of the tongue revealing the object of the focus; and even more times it is a statement such as “you haven’t even gotten to “this point,” and until such time, I can’t seriously negotiate with you.” Seeing through such phrases and statements, an astute negotiator will listen to those clues and continue to probe to find out if that slip up or statement truly is a bottom line.
Finally, focusing on the bottom line might unknowingly cause others to also focus on that bottom line, and subconsciously, once someone else knows your bottom line, he or she will focus on trying to get to that number and you lose any conscious leverage you were able to build during negotiations, as it is human nature to try to achieve the result through the path of least resistance.
Instead of focusing on the bottom line, the sophisticated negotiator should focus on goals that he or she would like to achieve, and although a party should always be aware of the bottom line or the area close to the bottom line, the “real focus” should not be on “what must happen” for the deal to take place, but what you “would like to happen” when the deal finally takes place.
Entrepreneurial Strategies – Part 1
Published January 18, 2009 |
In a nation of entrepreneurs like the United States, Entrepreneurs make up the backbone of the U.S. economy, and they will be the ones who bring the economy out of the recession. So when looking at entrepreneurs and their inherent strategies it must be noted that some are purely deliberate and some strategies purely evolve with the market. Of course, the real world, inevitably, involves some thinking ahead as well as some adaptation along the way. Entrepreneurial innovation has never been part of the institutionalized systems and of large corporations. Systems have never been able to reproduce the thoughts and passions of genius entrepreneurs, or even the most ordinary competent strategist, and in almost all cases never will. Large systems and processes aren’t designed to encourage the creative and innovative thinking that comes from the passions, of true entrepreneurs.
So when we look at the requirements of entrepreneurship we know that good entrepreneurial management is part of the formula along with real entrepreneurial strategies. And the strategies for entrepreneurial success are few and simple, but yet difficult, since it takes a true entrepreneur to identify the real opportunities which present themselves, especially during times of recession. Recognition of market trends and conditions that create new opportunities is a strong trait that identifies entrepreneurs. Additional traits of entrepreneurs are innovativeness and creativity, willing to take to risk for their new ideas and innovations, able to anticipate future needs and problems, willing to work independently with self-direction, and a strong sense of competitiveness that comes from the passion inherent to the entrepreneurial spirit.
At the heart of entrepreneurship is innovation, which is the effort to create, purposeful, focused change in economic or social potential, which includes three kinds of innovation. The first kind of innovation is technological innovation which is innovation including new products, ideas, and technologies. The next kind of innovation is economic innovation which includes entrepreneurship and turning those things into new businesses and industries. Finally, cultural and social innovations which is the ability to invent new ways of thinking, new art forms, new designs and concepts that identifies trends in the marketplace and associated opportunities.
These different identifiable components of innovation can share the same thought processes of the entrepreneur as they reinforce each other and overlap. Many times the genius of the entrepreneur is noticed and identified because they are able to apply all three kinds of innovation at the same time to the same problem or opportunity.
The entrepreneur nation will eventually spur economic recovery, but timing of the recovery is dependent upon what kind of problems or barriers entrepreneurs encounter with systems and institutions, and regulations and taxes, that affect how quickly they can adapt their innovations to the marketplace.