Because it involves creating and recording the final deal, blunders you make during the closing stage can be more costly than others already discussed. At closing, your negotiations are finalized; once the deal is done, there’s no looking back. Here are some tips to consider to avoid these mistakes.
When re-examining the details of the negotiation, you might come across a miscalculation you made, an inaccuracy in your presentation, or an error in one of your concessions. You may even discover a concession that you didn’t mean to make. When there’s an error, bring it up immediately, even if it’s embarrassing. The longer you wait, the more it becomes permanent. Worse, it may seem like you planted the error as part of a ploy.
Beyond having the courage to point out your own mistakes, have the courage to stand up to the other party’s last-minute tactics. If the counterparty asks for an extra concession here and there, don’t give in just to be the good guy and help close the deal faster. You may not be liked so much at this stage, but don’t be afraid to say no.
Making decisions because you feel pressured is one of the worst mistakes you can make, particularly during the closing. Take the time you need to finalize the agreements made—you’ll be more confident about your decisions later. Some counterparties will try to pressure you deliberately, to get you to stop looking for concessions and make the deal. Bought a car lately?
While this slower pace may annoy your counterparty, don’t be coerced into finalizing anything you’re not ready for. Additionally, realize that most deadlines can be negotiated. Even if the extension is just for a few hours, use the extra time efficiently.
The use of any negotiation strategy or tactic, whether used during the body of the negotiation or at closing, carries certain risks, and naturally, it’s important to determine whether those risks are worth taking. Balance the risk, or the downside, of any negotiating point or concession, or even the time taken to pursue it, with the reward of that point or concession.
Many negotiators forget this and drive too hard on minutiae with little reward, or they do not drive hard enough on points that could prove very significant to the final outcome. If something’s not worth haggling about, don’t haggle about it! You’ll waste time, credibility, and energy that can be used for more important and rewarding items.
A good rule of thumb for risk that works well, especially for investors, is this: Invest only what you can afford to lose. That model expands well beyond investing—any tactic or concession or offer should be measured against what you can afford to lose or give up in the negotiation. Keep in mind that what you lose can be short or long term, so don’t forget about long-term consequences such as the opportunity to negotiate again.
Keep in mind that one of the biggest risks you can take is not preparing for the negotiation in the first place. Not only will a lack of preparation bog down the proceedings, you expose yourself to a multitude of unfavorable outcomes. Don’t risk shortcutting this important step.
Don’t Avoid Negotiating
Yes, negotiating can be stressful. But that doesn’t suggest at all that you should avoid the negotiation. Sure, it would be nice to simply assume a deal or a key part of a deal and walk away. No risk, right? Not right.
You know what happens. When you assume a deal (or a point within a deal) is set, but neither you nor the counterparty have confirmed it, it usually goes wrong pretty quickly. Better to talk it out, even with a quick text, email, or phone call. Negotiations are part of an ongoing relationship (usually). Don’t be an avoider. Avoidance behavior leads to mistakes short term and hurts the relationship long term.
Remember: while not negotiating seems to avoid risk, it actually creates it!
This mistake sails pretty close to the first pitfall, forgetting about the win-win. However, the mistake of losing focus is a little more general, covering goals and objectives subordinate to the overall win-win goal.
Losing focus on goals and objectives is a common—and dangerous—pitfall. You get so caught up in the moment or with the minutiae or personal dynamics of the situation that the original objectives fade into the background. The danger, of course, is that you don’t accomplish what you set out to accomplish in the first place, or worse, you give away the store.
You really can’t go wrong if you always keep a clear view of your main goals. If you and your team (and the other team) hew close to the original set of goals and objectives, then emotions like anger, anxiety, or the feeling of being overwhelmed won’t distract you or throw the negotiation off track. Hopefully, you wrote down your objectives somewhere so you can keep track of them.