Make Lots of Deals
Doing deals in general may be the most profitable use of your time, as long as you are dealing in areas that you understand well. If you are trying to hedge your risks across many business opportunities and you have established an “edge” in deal-making by getting more and better information faster and promoting your “win-win” ideas, then you may find that seeking and closing new deals is more profitable than operating any one project.
Presumably, you have been developing innovative products and services since the inception of your business, and are performing your marketing, advertising, and overall brand-building processes.
Hopefully, this work is running fairly well. In any event, you need to focus on the general concept of “closing deals” to make more money, faster. Every time any type of business agrees to your price, and your lawyers subsequently produce good paperwork, you have a deal.
The same is true every time you sell a product. Generally, the bigger your deals, the better off you will be, and the more deals you complete, the more profitable each deal will be.
If you can manage each individual transaction without a significant increase in fixed costs, you can end up with a company that possibly has high fixed costs but low marginal costs—in other words, a scalable operation.
In addition, it’s always beneficial to be the one who has the most legal power backing up deal negotiations. Lawyers can control the heavy paper flow that potential deals create and legally protect you from terms that could bite you in the end. Good lawyers will also provide valuable advice during each stage of your deal-making.
Keep in mind these important strategies below when you are preparing to make deals:
- Clarify to the opposing parties that your commitment is to your shareholders.
- After counterparts ask for concessions, make sure that’s all. Then explain to them the concessions they should be prepared to make in return.
- Be accessible, so the right people can find you when necessary. But don’t just wait around for others to search you out. Make deal offers persistently based on the best ideas you have developed, if you can find qualified targets.
- Make sure a wide range of options exist in deal terms so you don’t lock your prospective partner into a “no” decision. Put them in “yes mode” for easy items, and then you can go in for the “kill,” the main deal.
- Go for large deals, even if the numbers occasionally turn out to be unrealistic. It’s good practice for other deals when you will be able to get “big fish” and favorable terms.
- The more time you and your business counterparts invest in researching a deal, the more likely it is to eventually close. With that said, if you lose calendar time, you may lose the intended cumulative effects of the deal in the normal course of our rapidly changing economy and fickle consumer base.
- Be sparing in praising your vendors’ services until after any deal on the table is closed. Always be honest in your evaluation of vendors once your service contract is in place.
- Don’t agree to any one specific detail until you feel you understand and agree how it is supposed to fit within the framework of an entire package.
- Trying to pay the absolute lowest price to vendors may backfire and lead to a failed transaction or substandard service. For exceptional services, you should be looking for a low, yet fair, price.
- Be relaxed in negotiations, or you will give off a sense of fear that may put off the other side.
- While you should never allow yourself to be “beaten down,” you are often expected to negotiate and compromise. If you don’t want to do so, then politely move on to the next deal.
- Don’t compete or negotiate on price alone. Add valuable incentives.
- Aim for exclusivity in your contracts to lock out your competitors.
As you see, making good deals will require a variety of skills and a lot of motivation. You need to be prepared to do whatever it takes.
