Post-Haste - Speed in Sales Negotiation and the Walkaway Option
We can all learn a lot from both the Multi-millionaire investor Dragons in their series - Hilary Devey, Duncan Bannatyne, Deborah Meadon, Peter Jones, Theo Paphitis and the entrepreneurs on BBC 2 TV "Dragons' Den" http://www.bbc.co.uk/programmes/b006vq92/episodes/2011.
The shows are entertaining but also educational for those in selling and negotiation.
Seldom do we witness the pans of the negotiating balance swinging from deadlock to near deal back and forth.
Sunday night was an exception.
You can still catch it on i player if you are quick- although I think it will be an episode repeated - possibly even used to make a training film on negotiation.
After a nerve-wracking opening pitch, the brothers Jim and Richard George who were looking for an investment of £160,000 for a 25% share of the business were made offers by four of the Dragons, indeed 6 offers were suggested but a final agreement on a deal could not be reached.
The brothers Invented , developed and manufactured a Post saver http://www.postsaver.co.uk/ dual layer preservation sleeve.
Here is a time-line log of the negotiation that took place:-
- They were asking for £160,000 injection for a 25% stake in their business. They gave a short presentation of their offer and demonstrated the product.
- “Premature fencing failure has never kept me awake at nights.” quipped Theo at the post sales pitch questioning stage of their presentation.
- Soon the brothers showed they had researched the market potential .e.g. 40-80 million posts are put into the ground each year
- Patents in various countries mentioned
- Their projections were a turnover of £240,000 in the first year, next year £ 510,00
- Profit 1st year projections were given after Deborah stated she was interested in profit rather than turnover.
- Sales Pipeline referred to negotiations with fencing contractors , Network Rail etc.
- Deborah made the first offer “ I ‘ll Offer all money for 35% of business “ this was politely refused .
- Duncan signalled interest by asking where were they on their negotiability range.
- He then offered half the money and to be matched with another Dragon. "Two for the price of one."
- Theo stepped in to enquire what the brothers were looking for out of this project.
- “Give me a timeline” They answered “5 years”
- All the money 30% "Would you be happier with two dragons?"
- "If Duncan I’m happy 80k each" said Hilary
- 4 offers on the table. Maybe a record for even dragons’ den.
- Then it was Peter Jones turn."I’m out I don’t think IT WILL GIVE THE RETURNS."
- Deborah offered an imaginative additional option. She said she would struggle below 30% but "if you hit your targets then I would hand you back 5% OF SHARES so you have your 25%.
- The brothers had a quick ( maybe too quick chat about Deborah's offer)
- "WE'RE STICK TO 25%" !!!!
- "THAT’S ILLOGICAL" said Deborah
- Hilary " I agree with Debra your actions one step too far I have lost confidence in you. I’m out"
- Duncan "Do want to ask me how I feel now now?" " I’m out"
- Theo offered a last chance by offering to share with Deborah's last offer " and you get two dragons."
- Deborah "There a moment in a deal when things change- I don’t want it now. I’m sorry My offer doesn’t stand"
- Theo "I’m out"
- Six different offers from the dragons were turned down.
BBC host Evan concluded "If you don't like a deal you can always walk away"
While they couldn’t agree a deal on PostSaver, the brothers are already contemplating a second shot at the show with another invention.They have developed a special fuel-saving spout for use with fuel cans, which works just like a petrol nozzle at the garage and prevents overfilling by stopping the flow when the tank is full
This has been a debate of interest to Salespeople for many years.
Certainly the case of the Postsaver in the dragon's den was more about the negotiation phase rather than the selling phase.
2. Problem solving - control cost- trying to ‘buy’ their Yes
3. Unilateral Action – take it or leave it.
4. Capitulation - Surrender
5. Postponing - Delaying
6. Arbitration – calling in an influencer
7. Haggling - bargaining
Christine summarised her talk with a picture of weighing scales.
One pan represented DEADLOCK with weights of Finances, social Political pressure and time whilst the other NEGOTIATION had weights of concession, creating a Precedent and Credibility. All that was illustrated in action at Sunday's Dragon Den show.
Negotiation Skills 12 Steps
Behaviours to adopt when objections are raised