Basics of Negotiation

Understanding the Basics of Negotiation and How It Applies to Startups

Entrepreneurs negotiate not only with investors. Negotiating salaries with your team and planning vacations with your family are also negotiations where professional negotiation skills will come in handy. Check the basics of negotiation with startups in the article below.

The Influence of Negotiations on the Startups

Whether you’re making a big purchase, working on a joint project, or discussing your next promotion, you need to negotiate. In fact, almost any of our interactions is a negotiation – an opportunity to convince others to agree to the desired result for us. But what is the best way to convince others? Be softer or harder? Be friendly or aloof?

Success in any area of life – business, public or private – depends to a large extent on the ability to negotiate and achieve constructive solutions. However, negotiations often reach an impasse or do not produce the expected result. For effective negotiation and avoiding mistakes, it is necessary to know the laws of the negotiation process to be able to apply a fairly wide arsenal of methods and recommendations used in the practice of negotiating.

To create a company, you will have to make many difficult decisions and go through serious difficulties, in which you will be the main opponent. Sometimes in negotiations with oneself, it is useful to involve a third person who will look at the situation objectively. It can be a friend, colleague, or someone else you trust. Of course, investment in a startup is a risky business, and there can be no guarantees here. However, if the object of investment is subjected to a thorough, objective analysis and common sense speaks of the prospect of making a profit, invest safely.

What Are the Negotiation Principles to Follow for Startups?

The fact that means people are good negotiators is a myth. Good negotiators are good people. They are persistent in important matters and indulgent in non-essential ones. Remember that negotiation tends to kick-start a relationship. You don’t want to start a relationship on a bad note, do you? In most cases, you will find yourself working in a surprisingly small world. You will often meet the same people, so it is worth keeping a good relationship with them.

There are four key principles that are the most likely to cause errors if violated:

  1. Negotiations to attract investment must be carefully prepared.
  2. The negotiation process must be formalized.
  3. Information about a startup should be clear and complete.
  4. The deal must be closed quickly.

An Investor Comes to a Startup: How to Behave in Negotiations?

Most startups, at some point, face a common problem: the personal funds of the owners and the operational flow that the business itself generates become insufficient to continue intensive development. As a result, the owners have to make an important decision – either the business continues to slowly develop “on its own,” or the project begins to search for an investor with whom they will have to share powers and prospects.

There is a fairly common misconception that from a legal point of view, only agreements reached by the parties as a result of negotiations are important. As a result, the legal aspects of the very process of their conduct are quite often left without due attention. As a result, startup owners take actions that can have far-reaching negative consequences.