Deal or No Deal An entrepreneur's playbook for bargaining success

For startup success, mastering negotiation is non-negotiable.

Effective negotiation skills are a founder's secret weapon. Building strong relationships, maintaining integrity, and prioritising open communication emerge as fundamental principles for navigating high-stakes negotiations.

For entrepreneurs eager to elevate their game in this regard, here's Entrepreneur United Kingdom's winning playbook for bargaining success.

1. MINDSET MATTERS

Unitary, an artificial intelligence (AI)-powered media analysis company, has demonstrated significant success in securing investment, raising GBP12.3 million in a Series A funding round in October 2023. This achievement is particularly impressive given that the company had raised GBP6.7 million just seven months earlier. This rapid succession of funding rounds underscores the confidence investors have in Unitary's vision and capabilities.

Sasha Haco, co-founder and CEO at Unitary, believes that effective negotiation is a crucial skill in business, and according to her, mindset is key. "Negotiating is hard, particularly if you feel the stakes are high," Haco points out. "If you're ready to walk away, then it takes the heat out of the situation." As such, by maintaining a readiness to walk away from the negotiating table, Haco says she and her team can make decisions that are not driven by desperation, and instead by a clear evaluation of what is best for the company. This attitude not only alleviates pressure, but also empowers the negotiating team to hold firm on terms that are beneficial for long-term success. "You have to feel ready to walk away," she reiterates.

2. RAPPORT RESONATES

Building rapport is your golden ticket to sealing deals. People are more inclined to do business with those they feel connected to and trust. However, there is a general deterioration in communication skills that all of us need to contend with. Mike Greene, serial entrepreneur and star of Channel 4's The Secret Millionaire, attributes this decline to the widespread use of technology, particularly social media and mobile devices, alongside the lingering effects of the COVID-19 pandemic.

According to Greene, this combination has led to a societal "hangover" where interpersonal and social skills have reached an all-time low, with people struggling to effectively communicate. "They say that it takes 7-12 points of interaction before you can successfully close a deal, and yet, many expect marriage at the first date—in business at least!" Greene says. "If we believe—and I certainly do—from doing many deals that 'your network = your net worth,' then business owners need to up their game in networking, connecting, engaging, listening and responding to the needs of the partner, customer, or party on the other side of a negotiation."

3. CONVICTION CONQUERS

Negotiation is not about convincing, but conviction. One of the UK's leading business success and transformation coaches, Ross Temple, reveals that the skill of a successful negotiation comes down to three Ls:

• Language Take note of the words being used. Matching the language shared to you is the quickest way to build rapport, and to confidently reiterate you understand what they are saying. If you don't repeat the similar terminology, a client is not going to feel like they are being heard, and less likely to convert during a negotiation.
• Leverage Drive a conversation forward by using the momentum built by the earlier conviction to your negotiating advantage.
• Listen Make sure you are listening to what the individual is saying. Are you taking on board what their fears are, what problems they are facing, and what frustrations they are experiencing?

Charlie Day, founder of Sales Is Easy If You Just Know How and its accompanying podcast, helps entrepreneurs boost sales and scale their business. She stresses that mastering the art of listening is essential for successful negotiations.

"Active listening ensures you hear what the client wants/their pain points and barriers, which you can then use to negotiate," she shares.

4. WIN-WIN WISDOM

The best deals are made when both sides feel like winners. Levi Levenfiche, co-founder of PerfectTed, the UK's first matcha-powered energy drinks brand that secured investment from Dragon's Den investor Steven Bartlett last year, says that you need to know exactly what matters to your counterparty. "At PerfectTed, whether we are negotiating a new supermarket listing, or with prospective investors, we place major emphasis on researching the person that is on the other side of the negotiating table," he says.

Levenfiche goes on to say you can garner a huge amount of information about a person online, beyond LinkedIn. "The research goes as deep as knowing what the person's favourite workout class is, or what pets they have," he reveals. Levenfiche also advises entrepreneurs to listen (not just hear) what the other person is saying. "In a negotiation, if you let the other side talk—they will eventually give you even more information and insight into what matters to them," he adds. It's worth listening to Levenfiche's words—after all, PerfectTed has earned the distinction of being Steven Bartlett's most successful Dragons' Den venture, with 5000% business growth, and projected GBP12m revenue this year.

Related: From Blogging to Big Bucks

5. TRUTH TRIUMPHS

Whenever you're in an important negotiation, it is essential that you never lie. That's the note given by Cashing Out author Alexis Sikorsky, a consultant who helps entrepreneurs to scale and exit their businesses—he has himself successfully achieved a US$100 million+ exit, and assisted other founders in doing the same. According to Sikorsky, successful partnerships with investors and clients are grounded in transparency and trust, and this needs to be established from the get-go. "Be honest in your intentions from the beginning, and try to understand as precisely as possible what the other person's priorities are," he says.

Sikorsky points out that truth stands as the linchpin for forging strong relationships and sealing agreements; it's the honesty and transparency that ultimately pave the path to successful outcomes and lasting partnerships. "When trying to secure investment in particular, any dishonesty during negotiation will be quickly found out during the following due diligence process, and this could prevent you from closing the deal," he adds.

6. PREPARATION POWER

Thorough preparation is crucial for successful negotiations as it enables informed decision-making and effective strategy planning. Ryan Edwards, founder and CEO of Audoo, a multi award-winning technology company, is a skilled negotiator, propelling the London-based music tech startup into over ten countries across Europe, the Middle East, and Australasia, while also securing investment from Sir Elton John and Björn Ulvaeus. "The first piece of advice I'd give would be to over-prepare," Edwards says. "When I go into any investment meeting, I think of every possible outcome, and how I can prepare for each potential eventuality, with lots of research."

As an example, Edwards reveals that in Audoo's first big raise, he was up against a billionaire investor—however, it helped that he knew his numbers, and had prepared for every possible outcome of the conversation. "Through this preparation, I was able to triple the business valuations, and additionally negotiate a further GBP7 million in investment," he says.

7. FOCUS ON THE FOUNDER (I.E. YOURSELF!)

Founders must demonstrate grit, and they should have the perseverance to navigate the inevitable ups and downs of building a startup. This resilience is critical to overcome the myriad challenges that arise in the entrepreneurial journey, from securing funding and building a team, to managing market competition and adapting to changing industry landscapes. Nuan Zhang, a Senior Associate at Breega, one of the fastest growing venture capital (VC) firms in Europe, reveals that while a compelling pitch is important, the eventual investment hinges on the founders themselves.

"Great founders can inspire and lead their teams effectively, commanding respect from all stakeholders," Zhang points out. "Understanding what motivates a founder is crucial. A strong 'why' often translates into a passionate and committed founder, which is a key ingredient for success." Zhang's insights underscore the importance of personal attributes and leadership skills in the startup ecosystem. It's not just about having a great product or service; it's about having the tenacity, vision, and ability to inspire and lead a team toward achieving that vision.