Negotiation Isnt Confrontation Negotiation is about gaining something possibly an advantage and giving something in return but unlike confrontation the successful negotiator never walks away empty handed ID: 550839
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Slide1
Negotiate to Win/WinSlide2
Negotiation Isn’t Confrontation
Negotiation is about gaining something, possibly an advantage and giving something in return, but unlike confrontation, the successful negotiator
never
walks away empty handed. Slide3
Negotiation is Reaching an Agreement
Reaching an agreement means you get some or all of what you want and the other party gets something in return. Slide4
In real negotiation, both sides feel that they are gaining something which is the basis for both parties to agree. This is called Win/Win.Slide5
Everything is Negotiable!
Develop a mind set that that believes that everything is negotiable, that you can engage others in negotiation and that you will look past all of the signs that suggest otherwise such as price tags, policy statements, disclaimers and yes, commercial leases. Slide6
Five Keys To Successful Negotiating: Key #1
Look Beyond the Rules We Have Been Taught to Accept Often Without Question
Question any odd, unreasonable or unfair policy
Seek solutions that meet your objectives and the objectives of the policy/rule Slide7
Five Keys To Successful Negotiating: Key #2
Go Straight To The Top
You won’t get anywhere if you are talking to the wrong person
You have to figure out who the decider is
Say: I’ve gotten great service here. Who can I contact to tell them about it – That should open the door to the person who can make a decisionSlide8
Five Keys To Successful Negotiating: Key #3
Don’t Get Angry – The First One To Get Mad Loses
Always avoid confrontation
You won’t get very far if the decision maker has to manage two problems – the negotiation and your behavior
Avoid putting the decision maker in the position of feeling that they are not-going-to-take-that-from-you mentality Slide9
Five Keys To Successful Negotiating: Key #4
Never Negotiate in a Crowd
Most negotiations should be ono-on-one affairs
Successful negotiation means someone is going to make a concession which no one like to do publiclySlide10
Five Keys To Successful Negotiating: Key #5
Give In Order To Get
Give away something or lesser value to you but of greater real or imagined value to the other party
Sometimes giving something intangible like recognition or praise to get something tangible work
Other times give something tangible the other party will value but that you can do withoutSlide11
Think Solutions
Start by looking for the things, tangible or intangible the other party wants, needs or might value
Identify the likely problem or barriers to a successful negotiation
Think of the solutions – be a problem solver – be creative but not too creativeSlide12
Commercial Lease Negotiations
In Washington there is no applicable landlord tenant law that sets out what is fair or unfair or what is required in a commercial lease. The law is what the lease says in writing when both parties sign itSlide13
Commercial Lease Negotiations
That means that everything in a commercial lease really is negotiable – even though a landlord or property manager may imply or state that it is notSlide14
Your Business Plan is the place to start–can you afford the lease?
MARGIN MANAGEMENT
Good Bad
COGS 25% 50%
Payroll 10% 30%
Lease 10% 15%
Other 10% 15%
Total 55% 110%
Left for you or debt :
45% -10Slide15
WHY KNOWLEDGE OF LEASING IS IMPORTANT TO BUSINESS OWNERS
ON THE TOPIC OF ATTORNEYS
Attorneys practice law. They are typically not trained in business skills.
Business Owners practice a separate set of business skills and are typically not trained in the law.
In the end the business owner has to determine what is the right course for his/her business.
An attorney does not sign a contract. Only the business owner does. Slide16
What is the role of the real estate broker?
Real estate brokers are very highly trained sales people whose primary job is to locate qualified tenants and get them emotionally involved with the space being offered. This puts most small business owners at a disadvantageSlide17
What are the elements of the Letter of Intent?
TENANT & PREMISES
DISCLOSURE OF FINANCIALS AND BP
USE OF THE PREMISES
LEASE & RENT COMMENCEMENT
RENT - OPTIONS TO RENEW
DEPOSITS
ADDITIONAL RENT
LANDLORD’S & TENANT’S WORK/HVAC
TERMINATION RIGHTS/GUARANTEE
PARKING/SIGNAGE, ETCSlide18
What are the areas of common dispute between a Landlord and a Tenant after the lease is signed?
HVAC MAINTENANCE, REPAIR & REPLACEMENT AND TEMPERATURE CONTROL
PARKING FOR STAFF AND GUESTS
AND - MONEYSlide19
What is worth negotiating in a commercial lease?
RENT
OPTIONS
LANDLORDS WORK
TENANTS WORK
TI ALLOWANCE
LENGTH OF TERM
LENGTH OF PERSONAL GUARANTEE (TIME)
AND………..Slide20
What are the important language elements in a lease?
What legal entities is the lease between?
Is there full or modified NNN?
How much money will be due at lease signing?
What are the various dates involved: Lease commencement, possession, rent start, termination, window to renew?
What is the allowable use?
Alterations, Repairs, Signage, Assignment?
What are the insurance requirements?Slide21
What is a personal guarantee and does the tenant have to sign it?
IT DEPENDS ON WHO THE PARTIES THE LEASE IS WRITTEN BETWEEN ARE
IT CAN BE NEGOTIABLE IF THE TENANT IS AN ESTABLISHED CORPORATION OR LONGSTANDING COMMUNITY BUSINESS
THE LENGTH OF TIME OF A PERSONAL GUARANTEE CAN SOMETIMES BE NEGOTIATED IF ALL OTHER FACTORS ARE STRONGSlide22
What happens if I default on any of the terms of the lease?
Typically when the default happens the Landlord has the choice to file a lawsuit. If he does he will engage an attorney who goes to the court to file the suit. The attorney will hire a process server who will have the defendant(s) served in person. The defendant will have 20 days to hire an attorney and file a response with the court.
And…………Slide23
Q & A
Steve Burke
Washington SBDC – Seattle/Tukwila
steve.burke@wsbdc.org
206-246-4445