My idea of a “good deal” for everyone started a short time after I launched Paychex, or Paymaster, as it was first named. Originally, I had no intention of providing payroll processing services outside of my hometown, Rochester, in upstate New York, but an ex-colleague, Phil Wehrheim, from EAS approached me and asked to partner with me; we struck a fifty-fifty partnership deal (without lawyers), and he opened offices servicing Buffalo, Syracuse, and Albany. Then Chuck Wollmer, the employee of a client, came to me wanting to get in on the action. I was happy to offer him a partnership, but he wanted a franchise. That was how we started to grow into more than a small local business.
Making it a good deal for everyone was at the heart of Paychex from the beginning. It was ingrained into the company’s corporate philosophy, it made sense, and it was important to me.
For this reason, I feel it’s important to share what I know about making a good deal, or negotiating. I’ve always believed that if you can manage to negotiate a deal both sides feel good about, or at least think is reasonable under the circumstances, then it’s a win-win, and win-wins can lead to long-term relationships.
Here are some pointers:
- Good Deals Are Mutually Beneficial: Business is not war. Building relationships when there’s a clear winner and loser isn’t something that’s going to last.
- Figure Out What the Other Person Needs: A great way to do this is by thinking of the other person’s needs in the form of a number, and preparing by learning more about their situation.
- Be Wary of Vendors (Especially Lawyers): I do believe that vendors are useful for businesses, but it’s important to be careful. Working with advertising agencies, PR firms, and just about any other company that bills by the hour is hazardous to your bottom line. Parameters need to be set. When dealing with any such vendor, my advice is to insist on monthly detailed billing. You have to build a relationship that works in both your favor and theirs.
- Negotiation and the Pregnant Pause: Don’t underestimate the power of a pause, especially a well-placed one. It literally encourages someone to agree with what you have just said or suggested. It’s effective in closing sales deals, but also in getting people to tell you more than they might otherwise be willing to share.
- Avoid the “Win At All Costs” Mindset: As I mentioned before, business is not war. Any time you can get a good deal for everyone, it will turn out to be good for your business and increase your chances of long-term success. Don’t enter a meeting with this mindset.
- The “Never Negotiate from an Ultimatum” Rule: If you are trying to buy a car and you tell the salesperson that you are only willing to pay a certain amount or you will walk, then you had better be prepared to walk. In reality, however, you may be closer to a deal than you think.
- Ask Direct Questions: Direct questions require immediate answers; hesitating can imply a reluctance to answer the question. This will lead to suspicion as to the accuracy and honesty of your eventual reply.
- Win Graciously: You win some and you lose some; you make good decisions and you unfortunately from time to time make poor decisions. Just try and win more than you lose.
- Have a sense of humor: Believe it or not, business doesn’t have to be deadly serious all the time; you are allowed to have some fun. My no-nonsense approach more often than not looks for humor that contains a message or a test, be it of character, personality, or intelligence.
But humor only works if you’re committed to the other tenants of no-nonsense negotiating. As my new book Built, Not Born: A Self-Made Billionaire’s No-Nonsense Guide for Entrepreneurs explains, that includes being sympathetic to the other party’s situation, being cautious a bout working with vendors, and winning graciously.
Originally published on Quora.
A Self-Made Billionaire’s No-Nonsense Guide for Entrepreneurs.
Paychex Founder, Tom Golisano shares the hard-won lessons from his entrepreneurship journey in Built Not Born, a guide to growing a company to any size by going against the grain like he did.