I was recently reading an article on the business challenges facing Formula One race drivers. Most drivers in F1, since about the Seventies, have used managers for their business affairs. These managers negotiate contracts, sponsor deals, appearances, and the like – and of course, they take commissions. With top F1 drivers earning upwards of $40 million per year these days, that’s quite a sum of money.
One driver who was notorious for never using a manager was Austria’s Gerhard Berger, who drove in the ’80s and the ’90s. Berger was very fast, very rich, and notoriously tight with a buck. In this article, he was asked why he didn’t have a manager – to which he responded that he didn’t want to pay someone else to do his business for him.
“My negotiation was very simple,” he said. “I went in with two figures. What I wanted and what I’d take. I walked away when the amount on offer was below what I’d take.” Berger seldom walked away – not only because he was talented, but because he made the negotiation process as simple and painless for his teams as possible.
That’s the way negotiation should be, in my opinion. No matter what anyone says, few people actually enjoy negotiation. Negotiation means that the customer has to invent reasons not to do business with you – which is an unfortunate situation. Berger never forced his teams into that position.
As a result, Berger drove for the top teams, he was well liked not only by the team members but by management, and he was extremely financially successful. That’s not a bad result, is it?
Want to negotiate the right way? Here are three simple tips:
1. Have a “Walk away” number – and walk away. If you’re always going to sit at the desk, you have no power in negotiation. If the terms are unacceptable, the negotiation ends. And you’d be surprised at how often ending the negotiation restarts the negotiation on the other side of the table
2. Keep it friendly. Never get into the trap of a hostile or adversarial negotiation process. If I don’t win, I don’t play – and by “winning,” I mean a resolution that works for everyone at the table.
3. Justify your discounts. If you have to lower your price, be prepared to remove some of the features and/or benefits from the offering. Berger, for instance, would lower the number of personal appearances he’d make for lower salaries.
Negotiation doesn’t have to be unpleasant or difficult. Follow this path and you can get past the negotiation to the sale – and that’s the fun part!
