Deal-making is an important part of everyday life, wherever we are, or whatever we do. In business, the ability to turn a good deal into a great deal can add a lot to your self-esteem and personal achievement, not to mention your financial power. But deal-making is an art and can be learned.
Below are some timeless rules in deal-making that successful deal-makers have known, as recommended by Jay Abraham:
Rule 1: Put your payment obligations at the end of the deal, not at the front. Tell your negotiating partner that you’ll pay any risk you have within 15, or 30, or even 60 days after the deal is done and the results are known. By doing this, you’ll preserve huge amounts of your own cash, and you’ll be able to work on the other company’s money for months – if not longer.
Rule 2: If a deal is risky, structure it so that you won’t have to commit too much money in the early stages
Rule 3: Start the negotiations by offering less than you’re willing to give. You won’t know how much negotiating power you’re leaving on the table, or giving away, until you try this approach. Too many business people go out with their best offer first, and have no negotiating leverage left, except to eat further into their already meager profit.
Rule 4: Always ask for joint tenancy of all the customer lists or buyer prospect names resulting from any customer “list” deals that you do. Those names are worth a lot of money. You can sell your partner the right to forego your right in using the names if they turn out to be valuable, but you can’t get the right to the names after the fact.
Rule 5: Add the right to assign your interest to others in any deal you negotiate. That way, you can sell your rights off, lease them, or finance and trade them to somebody for a cash lump sum – or for some of their assets.
Rule 6: If the negotiations involve a highly original idea of your own, get your partner to acknowledge your proprietary interest in the concept in a letter of agreement, or contract, before you start dealing. If you wait until later, after the fact, it might be impossible to get that concession.
Rule 7: Don’t start the deal until a “contract of agreement” is fully discussed and signed. Don’t start, don’t reveal too much, don’t make your assets available, don’t make your operation open to the other party until you have an irrevocable, binding and fully stated agreement. Take my word for it, you will regret it if you don’t.
Rule 8: Always reserve the right to audit the other fellow while the deal is in place.
Rule 9: If you lack talent in negotiating, bring in someone who has that talent, but will wield it for you in a non-bullying way. (Don’t use a lawyer, but pay the person who does assist you a percentage of the deal if that’s what it takes to motivate them.)