Family members in business together often engage in negotiations that vary from negotiations between family members and other employees to those with customers, vendors, or investors.
And the stakes can run high in terms of risk of the number of dollars or even the future of the family business. So how can you, as a family business owner, best position yourself for success in your next negotiation?
You might simply remember two words – Be Prepared. In the words of Benjamin Franklin, “By failing to prepare, you’re preparing to fail.”
The best negotiators are the ones best prepared. They have a plan for the negotiation before it even starts. And the more you know, the better prepared you will be.
Below is a simple checklist to up your game in your next family business negotiation and show up prepared for success.
- What do I ultimately want to achieve in this negotiation?
List your goals and rank them in order of importance. Identify which goal would be ideal to achieve. Set your aspiration goals high (though realistic) and you’re more likely to get a better deal.
Notice this requires more than just having a goal to get the best deal possible because the other side will want that too.
- What is my best alternative to reaching a deal in this negotiation?
Identify your best option if you were to walk away from this deal. This is referred to as your BATNA (Best Alternative to a Negotiated Agreement).
Or you can call it your Plan B. When negotiating with other family members, however, it’s important to consider the value of the family relationship when identifying your best alternative. For example, choosing a non-family member over your daughter for a key executive position might be your best alternative, but not if it comes with a price tag of alienating your daughter.
- How much time do we have for negotiations?
Are there any deadlines looming?
- What do I have that the other side needs?
This might be your authority or expertise, for example.
- What is my absolute bottom line?
This is the point where you would rather walk away than agree.
- What are the other side’s interests?
Specifically, when negotiating with other family members, be attuned to any underlying jealously or competition that can arise from longstanding resentment.
Also, how important might each interest be to them? For example, one family member might have a key interest in keeping the peace while another, not so much.
For any business negotiation, it’s often valuable to do some homework by perhaps searching online or asking trusted colleagues with knowledge about your counterpart’s business or industry.
- How might my past relationship with the other party affect this negotiation?
Address any underlying family tensions right away. Otherwise, any underlying resentment can easily spill over into negotiations and kill a potential deal.
It can often be helpful to bring in a mediator as a neutral third party to manage and isolate underlying emotions and facilitate an optimal deal for all parties.
- What objective criteria or precedent supports my preferred position?
Objective criteria refer to a fair, independent standard. Ideally, objective criteria such as market value, expert opinion, or standard industry practice should be agreed upon by all parties at the outset of the negotiation.
- Do we need to involve any third parties?
In a potential sale of the family business or one member’s interest, for example, you might need an accountant to calculate values. You can also call in a family business mediator to keep you out of court.
The above is part of this complete checklist posted by the Program on Negotiation at Harvard law school.
Like this post? Sign up for our newsletter and receive more tips, updates, advice, and inspiration right to your inbox.