There is a misconception that most leaders think that the negotiation starts when the meeting begins. But in reality, the framing of the negotiation starts quite early. By the time a founder sits with a lawyer, an investor, or a partner, the outcome of the negotiation is already shaped by perception and subtle signals about who can hold the leverage. A lot of people try to win the negotiation through intimidation, but that does not always work.
When it comes to business, people do not only focus on the raw facts but also on the way they are represented. It is also important how those facts are perceived. Let’s find out the reality of negotiation.
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Positioning Happens before Conversation
Positioning is considered the process by which a party defines the terms of the interaction, such as who has options, who has the authority, and who needs the deal more. This process takes place before any explicit negotiation takes place. When it comes to startups, positioning is often shaped by various signals like reputation, investor interest, perceived traction, and sometimes even the communication style. While one party might be overscheduled or selective, the other party can be responsive and eager. However, their behavior cannot change the fundamentals of the business.
Professionals have claimed that when the opposing party showcases absolute control and confidence, it can change the pre-assumed outcome. But that confidence is often constructed, and the outcomes are more likely to be determined by strength establishment in the initial frame rather than economic insight. That is why positioning is a powerful move that can affect perceived hierarchy in the negotiation.
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The Initial Frame Decides the Outcome
Negotiation deals are often won or lost before a substantial amount of details are discussed. In many cases, one of the parties might consider the other party to be dependent on the deal, and based on that, an approach constructed with a pre-determined outcome. They introduced favorable terms with the expectation that the deal would be accepted.
For the founders, this pattern can be useful for fundraising purposes, where two companies with similar metrics can receive different terms based on the positioning of the process. A founder who is more likely to explore and evaluate multiple options or move forward in a deliberate pace and ready to walk away if needed, is the ones who reflect dependence or urgency. The key takeaway from this is that no founder should bluff or misrepresent reality in the negotiation. The lens of perception should be actively shaped, or it can work otherwise.
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Founders Can Take Control of Positioning
When positioning becomes mandatory, the founder must learn to take control of positioning for better outcomes. Strong positioning can take place with optionality. The ability and mindset to walk away from a deal is not weak or running away, but it shows the strong resolve of the negotiator. It is important, as without this, it would be difficult to project strength.
Communication can help to embrace optionality. Founders can find themselves in a weak spot through premature commitment, over-explanation, and excess availability. That is why a more deliberate approach is required with controlled access, clear timelines, and measured responses. This shows that the choices are made from a position rather than a necessity.
It is also important to find out when the other party is trying to establish a frame. Some of the common techniques are take-it-or-leave-it, artificial urgency, etc to name some. Positioning is not about dominating the other party, as its real purpose is to bring true balance through the negotiation deal.
