Friday, July 30, 2010

High Dollar Negotiating Tips

This will be the first in a series I'm going to be writing about negotiating.  Negotiating isn't just important in business.  It's also valuable in your personal life.  When you are talking to your kids, you're negotiating (even though they may be winning).  Dealing with your spouse can be a process of negotiation.  When you're purchasing something, it's a negotiation.  Business deals are full of negotiations.  Buying a house, or a car - serious negotiations.  So, this is a topic that really affects everyone, and that's why negotiation is my favorite of all business topics.  In this blog, I am going to give some helpful tips in negotiating.  Later, I'll talk about some specific negotiating tactics, preparing for a negotiation, closing the deal, and more.  So, stay tuned.  For now, here are some helpful tips to think about in any negotiating situation.

1.  Be prepared.  This means that you should know about the person or business you are going to be negotiating with.  What are their "hot buttons"?  What do they want?  What problems are they experiencing?  What problems can you help them solve?  What weaknesses do they have?  What weaknesses do you have?  How do you hide those?  How much do you want to pay and how much are you actually willing to pay?  How much do you want and need to get paid?  You need to spend an adequate amount of time preparing for whatever deal you're working on.  This is the first and most important part of any successful negotiation.

2.  If you're planning on making the first or opening offer, it needs to be very high or very low depending on what's best for you.  For example, if you're trying to purchase a piece of real estate and you know the market value of the property is $100,000, you might want to initially offer $85,000.  It seems like a ridiculous offer considering the market value, but this prevents the seller from coming out of the gate with a ridiculously high offer like $125,000.  You're anchoring the sales price at or below the market price and that starts you out in a strong position.

3.  Never fall in love with a deal.  You must remain objective and keep your options open, including the option to simply walk away.  The purpose of a negotiation is for you to get a good deal.  Don't sabotage yourself by losing objectivity.

4.  Always say "no" to the other side's opening offer.  They are trying to anchor the deal in their direction anyways, so don't say "yes" yet.  Make them work for it.  Even if you like the deal, you don't love it and you are going to say "no".  This will get you a better deal every time.

5.  When the other side makes the opening offer, be shocked at their offer because you can't believe they would offer such a bad or one-sided deal.  Then wait for them to cave in and make a better offer.  Always say, "you have to do better than that".  Even if you like their opening offer, be shocked and tell them to do better.  It will work most of the time.

6.  Only give up something if you get something in return.  These are concessions and you can't concede if the other side is unwilling to do the same.  Because you did your planning in advance, you already know what things you would be willing to concede and what things you want.  If someone says they need you to drop the price by $5,000, (after you look shocked that they would ask such a thing) you tell them (very reluctantly) that "I might be able to do that, but I would need you to pay 40% up front instead of the original 25% that we talked about before".  Always get something of value in return for giving up ANYTHING - regardless of that thing's value to you.

7.  Never offer to split the difference.  That is your opponent's job, not yours.  If the other side wants $100,000 and you want to pay $80,000, don't offer to split.  However, if the other side offers to split the difference, then you're in a very good position.  That means they would now be willing to accept $90,000 and you're only $10,000 apart instead of $20,000.  From this point, you would say, "wow, you'd be willing to take $90,000?  That's great because now, we're only $10,000 apart.  Surely there's a way we can get this deal done since we're so close on price."  If you end up paying $87,000, you're in better shape than if you would've offered to split the difference.  Because then you might have ended up at $93,000.  You just saved yourself $6,000!  Great job!

So, that's quite a bit of information for you to soak up for now.  Try this stuff out.  It's amazing how well it works.  Practice, practice, practice.  Have fun with it.  What's the worst thing someone can say to you?  "No"?  So what.

Stay tuned for more High Dollar Negotiating Tips.

Sunday, July 25, 2010

You're Worth It!

Have you ever taken the time to just think about what you put your time into?  If so, spend some time comparing it to the things that you want - in life, in work, financially, family, etc, etc, etc.  How does the time you spend compare to the things you want?  You need to realize something very important:  You're going to get exactly what you're willing to put your time into.  So, where are you spending your time?

I want to be (for lack of better words) a famous management guru.  I also want to someday win a million dollars in a world class poker tournament.  I want my kids to be crazy smart and be more successful that I dream of even myself being.  I want my wife to think and say nice things about me when she thinks of me and talks to others (and I want her to mean it).  All of that stuff takes work (TIME).

What do you want?  Maybe you want to make more money.  Maybe you want to make A LOT more money.  Or, maybe you want to be a better cook, or a better student.  Maybe you want to be a better hunter, better coach, better mom or better dad.  You just might want to be better than the person in the office next to you.  OR - Maybe you want to be the best at something.  (Yes, I know - I've made my point.)

Personally, I think you should want to be the best at something.  I sure do.  I want to be the best at everything that I do.  Well then, figure out all the other places you're wasting your time and re-allocate that time to the things you want to be best at.  Then, work at being the very best in the world.  Don't sell yourself short either.  Believe me, you can be the best at something.

I'll get you started.  This is so easy - I promise you that you can get this done. 

Step 1:  Write Down Exactly and Specifically What You Want to be THE BEST AT.
Step 2:  Write down 5 or 10 ways you can make that happen.
Step 3:  Never, ever give up until you've accomplished your goals.
Step 4:  Give yourself a way of knowing when you've accomplished your goals. 
Step 5:  Reward yourself for getting it done.

Also, be reasonable.  Look, I want to be President of the United States, but they're not going to let that happen.  I also want to be Free Safety for the Dallas Cowboys, but I can't list all the reasons that's not going to happen.  However, I do want to make $350,000 per year.  I can make that happen, so I'm working the steps.  I do want to be on the cover of a business-related magazine.  I can make that happen too, so I'm working the steps.  I'm just putting the time in that it takes to get this done.  It's hard work, but the payoff is going to be huge.  And, I think I'm worth it.  And, so are you.

Finally, if you find yourself reading this and telling yourself reasons you can't do what you want, or reasons you can't have success in areas that I think you should, then stop it.  Start back over at the top and try again.  Don't shut yourself down.  There are plenty of people out there who will try to do that.  Don't help them.  Lots of people are going to tell you that you can't do stuff.  That's OK.  They're wrong anyways.  Don't make it true by buying into it.

For lots of people, this requires a complete paradigm shift in their lives, but you know what?  Make that shift.  Don't sell yourself short.  You're worth the success that you dream you should have and it's not too late either.  Carpe Diem - "Sieze the Day!"  Sieze it every day.

Saturday, July 24, 2010

Are You Breaking Records or Nearing Disaster in Business

If your business was nearing disaster, would you even know before it's too late?  How would you be allerted to serious problems?  Would you rely on an employee to tell you?  Do you think your competitors are such good friends that they will give you a head's up?  Or, would you need to sort through piles of reports to find problems?  You need a systematic approach for identifying potential problems before they become total nightmares.

On the flip side of that, you also need a way to measure success and break records.  Although it feels good, and it certainly sounds good (at least to you), you can't just go with your gut.  Again - reports:  who has time and if you make time, will you really know what you're looking for?  Will all of the pieces make enough sense that you can do something valuable with it?

I can come up with hundreds of more questions just like the ones above, but the answer is somewhere else all together.  For those of you who were reading my blogs back in 2009, you will remember one called, "Record Breaking Business Tracking Systems".  THIS IS THE ANSWER.

These are charts of graphs, often referred to as dashboards, that give you up-to-date reporting that will save your butt and make you a business hero.   With these dashboards, you will track everything that you would otherwise need a long report to figure out.  Someone will report the data and enter it into a simple Excel spreadsheet and the graphing add-in program will create your charts.

Here's the really important reason to use tracking systems.  When you see a drop in production and it lasts 3 weeks, you don't need to wait until 3 months to recognize it and solve the problem.  By then, it could be too late.  If you track new customers and you see that total new customers drops by 3 per week for the last 3 weeks, you give yourself a chance to turn it around before it gets totally out of control.

On the other hand, when something is working really well and you see the graph jump to a new high range, you get an opportunity to figure out how it happened and reinforce what works.


You may be saying to yourself, "I get it, but I don't need graphs, besides it's just Excel.  Big deal."  You better believe it's a big deal.  It's the single biggest deal I know of to positively affect business growth.  Go back and re-read by previous blog about business tracking systems, then put some serious thought into the following question.

By how much do I want to beat my competition?

Promotions happen from growing the business and beating the competition.
Raises come from growing the business and beating the competition.
Recognition for being a great manager comes from growing the business and beating the compeition.

If you want help setting up your Record Breaking Business Tracking System, then I want to help you.  Contact me and we will work something out that makes sense for you.  I've written the manual on how to create these systems (literally).

Wednesday, July 21, 2010

Don't Lose Money

In the early part of 2008, I began reading a book called, "Rule #1" by Phil Town (see below).

THIS TURNED OUT TO BE A GREAT BOOK!  In his book, Town lays out a simple strategy for investing.  Well, as I was reading, I decided to create an Excel spreadsheet and try to apply the formulas that he teaches for evaluating, buying, and selling, stocks.  This spreadsheet was really just to test out the book - to see if it really worked.  Since I wasn't sure yet, I DID NOT INVEST MONEY IN THE STOCKS THAT I EVALUATED USING THESE FORMULAS.  Mistake?  Read on.

I evaluated several stocks, but eventually narrowed my list down to 10 finalists.  They are listed below along with their stock price as of March 13, 2008.

Apple - AAPL                             $122.25 - AMZN                 $68.32
Dell Inc - DELL                           $19.85
Microsoft - MSFT                       $28.62
Wal-Mart - WMT                        $50.60
China Mobile LTD - CHL            $70.72
Qualcom - QCOM                       $40.25
Best But - BBY                            $40.61
Tradestation Group, Inc - TRAD  $10.04
Cisco Systems - CSCO                $24.95

Since March 2008, I think most people understand that markets around the world went into the tank.  With that said, if I had purchased those stocks and then sold them at their high point in the last 52 weeks, 7 out of the 10 stocks above would have made money.  Apple and Amazon could have made me rich.  The 52-week highs for those stocks were:

Apple - AAPL                                      $279.01 - AMZN                          $151.09
Dell Inc - DELL                                    $17.52
Microsoft - MSFT                                $31.58
Wal-Mart - WMT                                $56.27
China Mobile LTD - CHL                     $59.22
Qualcom - QCOM                               $49.80
Best But - BBY                                     $48.83
Tradestation Group, Inc - TRAD           $8.89
Cisco Systems - CSCO                        $27.24

So, for every dollar I would have invested in these stocks (including the losers), I would have made .51 cents profit.  That's a 51% return on investment (ROI) or put another way, a 25.5% ROI annually.  Where else can you get that kind of return?  Some might argue that the answer to that question is Gold, but that's another story all together.

This process doesn't happen without some work, but I'm eventually going to take the steps to evaluate more stocks based on today's financial situation.  I wouldn't do it without this book though.

By the way:  Rule #1 is "Don't Lose Money".

Monday, July 19, 2010

Take a Chance

This is a topic that I have really struggle with - Taking a chance.  I've found myself having a fear of failure or a fear that people won't like my stuff.  I wrote this book, "Record Breaker" LAST YEAR.  I literally finished it 1 year ago, but I delayed doing anything with it.  That started weighing on me because I knew I had that unfinished project.  Then one day I was talking to a friend who said something that finally helped me get past myself so that I could do something successful.  He said:

How many people do you know?  How many people have you ever known?  A thousand?  More?  How many of those people ever wrote a book?

You know what?  I only know one other person who ever published a book and he's a PhD.  So that energized me.  Now, I have a meeting with a printer in 2 days.  I can't wait to get this project finished up.  Even if I never sale 1 copy (and I plan on selling out), I published a book and that makes me 1 in 1,000.

I'm taking a chance.  I'm getting past myself and my irrational fears and doing something that will be successful.  What are you holding yourself back on?  What big ideas do you have that you haven't followed thru to completion?

I think everyone should take their chance.  Be 1 in 1,000.

Friday, July 16, 2010

15 Car Buying Tips to Keep you From Getting Hosed

1. Shop around to see what other dealers and private sellers are selling cars for.  Get a working price range before you talk to any sales people.

2.  Have a list of car choices.  Don't put yourself in a buying corner by limiting yourself to a single choice because. . .

3.  Don't fall in love with a car.  If you fall in love with a vehicle, you will lose objectivity, and you will get hosed.

4.  When talking to a salesman, be disinterested in even doing the deal at all.  In fact, be a little uncomfortable with the whole idea of changing cars because you are. . .

5.  In love with your current car.  It's going to be tough to get you to trade up or out of your current car.  Let the salesman see that for you, buying a car is not an emergency.  You're in no distress.  You can take it or leave it and you know what?  You just might want to leave it since you love your car so much anyways.

6.  Handle only 1 deal element at a time.  Deal elements include:  total sales price, financing / interest rate, monthly payments, trade-in value, and the kind of car you might purchase if you do the deal.  Start with the total sales price of the vehicle and don't move off of that subject unless or until you are satisfied with the price.  No deal is good if it costs too much.  So forget monthly payments, interest rates, and trade-ins.  There's plenty of time to get to that because. . .

7.  You are willing to close the place down if that's what it takes.  What time does the dealership close?  9pm?  That's OK.  I cleared my schedule so I can take as long as it needs to take.  By the way, would you be helping those people over there if we were already finished up here?  Make the salesman uncomfortable about losing the commissions from all of the other customers he could be helping if he would just quit giving you the run-around.

8.  Know your credit score and debt to income ratio before going to a dealership.  Remember, financing is irrelevant to you until the other deal elements are worked out anyways.  When you know how good your credit is, you'll already have a pretty good idea of how good of a financing deal you are going to get.

9.  Make them show you the Black Book.  I know this thing exists, but has anyone ever seen it besides the dealers.  I had a guy tell me that they don't use Blue Book values.  They use the Black Book.  So, I said, "fine, bring me that book so I can see it too."  For some reason, he agreed to my price instead of showing me the book.  I thought that was interesting.

10.  When the salesman starts to make too many trips up into the manager's office, just demand to talk directly to the manager.  You don't need a middle-man to get this deal done.  That middle-man's not on your side anyways, so try to get rid of him and go straight to the decision maker.

11.  Make a ridiculously low offer to get started.  If you know the average sales price of a particular vehicle is $20,000, then offer $15,000.  This anchors the negotiated price range lower and certainly closer to the average sales price.  Otherwise, the dealer is going to start high and then you'll be forced to work too hard.  Make the dealer work instead.  And if the dealer makes a ridiculously high offer, let him know that it's ridiculous.  Don't be scared to speak your mind.  It's your money.

12.  Never offer to split the difference - ever.  That's the dealer's job  You're not willing to settle for the difference anyways, so don't bother.  However, if you want to pay $18,000 and the dealer is stuck on $24,000, but offers to split the difference, then guess what?  The dealer's new number is $21,000 (splitting the difference of $6,000 lowered his price to $21K).  Now, you're only $3,000 apart and you say, "well, we're only $3,000 apart from what I want to pay and what you're willing to accept.  Surely there's some way we can make this deal work."  You'll probably end up paying $20,000, but you only had to go up $2,000 and the dealer went down $5,000.  That's a success!

13.  Be ready and willing to walk away.  You're not in love with a car and certainly not with the deal.  So, when you hit an impasse, just walk away.  This is very powerful because believe me, they don't want that, especially after you've spent the last 3 hours of his time working a deal only for him to lose it along with all those other customers he couldn't help because he was giving you the run-around.

14.  Be reasonable, but keep it to yourself.

15.  Recognize the right deal when it presents itself and take it.  At some point, the dealer has really done all that he can.  You need to recognize that and make a decision.