Tag: Entrepreneurship

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Why Business Schools Are Horrible At Teaching Entrepreneurship

I know it may seem strange to suggest that business schools are horrible at teaching entrepreneurship. Many business schools today have entrepreneurship programs, heck I was a part of one!  So why do I claim that business schools are bad at teaching entrepreneurship? In order for me to make my case, we will need to hop into my time machine and take a look back at the history of business schools.  You’ll will see why I can make this claim and what it means for you as a budding business person. So take a seat in my Delorean but don’t touch the time circuits, they are a bit shaky.

So Where Did Business Schools Come From?

I got a fun question: When was the first business school founded? Why was it founded anyway?

Not until the 1880s. Wharton was the first business school- I know this because it’s the first thing they told me when I got accepted. Moreover, the first MBA wasn’t offered until 1908! Although it may seem shocking, it took quite some time for the education system to adjust to what the market actually needed.

Business Schools Were Created to Train Managers, Not Entrepreneurs

Once business schools were created, what did they teach and who taught it? Of course business schools taught management: meaning, how to coordinate, how to plan and increase efficiency. Ultimately, the challenge was to train people how to manage a large organization.

Initially, practicing managers produced the ideas taught in business schools; people like Chester Barnard, who was a practicing executive or Frederick Taylor, famous for his studies on how to increase the efficiency of labor using a stopwatch and optimization tools. As “management” became more established, gradually ideas from other academic disciplines like economics and sociology were also applied to the study of management, particularly after the Carnegie and Ford reports criticized business schools for lacking academic rigor. Gradually, business schools became even better at training managers and became a fundamental fixture of business life. But remember, business schools were created to train managers, not entrepreneurs.

But what about Entrepreneurship?

Entrepreneurship wasn’t and still isn’t really a topic business schools have been too concerned about. Entrepreneurship only started to emerge in business schools after a burst in technical innovation. Indeed, entrepreneurship didn’t really exist in business schools until the 1990s and only recently has become a mainstream topic. Not surprisingly, the emergence of entrepreneurship in business schools has caused a huge dilemma. Who will teach it? What will they teach?  It’s a bit of an oxymoron.

What kind of entrepreneur will teach at an institution that he/she doesn’t own? How can those who simply study entrepreneurship and not actually put it in action, know what to teach and advise to others when things change in business everyday? Business schools are not too worried about these issues. Why? Because no one attending is asking these questions. Most entrepreneurial minded students are paying over $120,000 for a 2 year networking event.  This is insane.

Are There Business School Alternatives?

Many like Seth Godin and Richard Branson are pushing for alternatives to business school. They know that business principles need to be learned, then implemented in the real world, thereby learning and doing side by side. You don’t need to spend 2 years and $120,000 to excel as an entrepreneur.

The current state of business education and entrepreneurship training really bothered us as both educators and entrepreneurs. We found that there are no real, substantial alternatives out there…so we decided to create one.

The $100 MBA– a solid business education for entrepreneurs, a supportive community and the motivation you need to grow as an entrepreneur.  You can learn more about the $100 MBA here.

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The 6 Biggest Lies Business Schools Love To Tell

As many of you know, I spent over a decade as an educator at the high school and college level. I was a middle manager and teacher trainer at the college level for 5 of those years before quitting out of frustration and pure disgust. It’s not all “shaping the minds of the future” and “preparing them for the real world”. Not even close. It’s a dirty business. And this post will prove it.

I’m also a Business School MBA dropout. I got accepted to Wharton’s MBA program and bailed after a semester. One of the best decisions I’ve ever made. This post will show you why.

I do have to say though, that this post isn’t just a way for me to share with you some insanely insightful information, but a way to reconcile some of my own demons from the past.

Here are the 6 biggest lies business schools love to tell, and continue to tell, to keep themselves in business. Buckle-up. It’s going to be a bumpy ride.

1.    MBA graduates have a better chance of success.

Top business school programs are notoriously difficult to get into. They need to be because their whole reputations is built and based on the success of their graduates. So business schools only accept those with the highest intelligence and ambition.

They know they can’t teach you anything you can’t learn for yourself – if you were a bit resourceful.  They know that any success a graduate has is not due to education they offer.  They know they don’t create successful people. They simply accept them and then take credit for their success.

The individual’s chances of success don’t just dramatically increase because they attended a $100,000, 2-year seminar. That individual was committed to success before they even stepped foot onto campus.

2.    An MBA is a great financial investment for your future.

With 2 years ahead of game in the real world and living without a $100,000 student loan packed with interested, a non-MBA graduate actually ends up taking home more money within 2 years of finishing their undergrad.

The average top MBA graduate will have to pay a $1,300 loan payment every month for the next 10 years. Interest is a killer. This means even if an average MBA graduate makes $83,000 dollars a year they only really take home roughly $45,000 after taxes and paying their student loan debt. While a non-MBA graduate with 2 years of real-world experience under their belt, takes home roughly $51,000 annually after taxes. With no, $1,300 monthly loan for the next 10 years. A non-MBA graduate is sitting pretty.

The definition of a great investment is getting a high return on your investment of money, time and effort. This doesn’t look like such a smart investment now, does it?

3.    An MBA will greatly increase your chances of getting a great job.

According to the Wall Street Journal, the effect of the 2008 financial crisis has played a major role in shifting corporate recruiting strategy. Companies have become wary about spending and have looked to trim costs. They are opting for younger employees who, in many instances, are just as talented as MBA graduates but willing to work for about half the salary.

4.    An MBA will teach you how to be a great businessperson.

According to Aaron Boyd, head of research at Equilar, reports that more than half of the 50 highest-paid executives lack MBAs. An MBA is not designed to teach you how to be a great businessperson. It’s designed to prepare you for entry-level management. Little is learned about being a great leader, innovator or entrepreneur.

Many remarkably successful entrepreneurs only hold a high school diploma like Steve Jobs, Richard Branson, Mark Zuckerburg, Jack Dorsey, Michael Dell and Bill Gates.

Best selling author, Seth Godin weighs in on the MBA debate and states, “An MBA has become a two-part time machine. First, the students are taught everything they need to know to manage a company from 1990, and second, they are taken out of the real world for two years while the rest of us race as fast as we possibly can.”

5.    An MBA is prestigious and gets you respect.

This may have been true 30 years ago but nowadays people really only respect one thing. Results. Having an MBA proves nothing theses days. Except, of course, that you are able to follow instructions and have a 100 grand to burn. What you actually accomplish, what value you add to this world is what earns you respect.

Taking pride in being an MBA graduate while working at a job that you hate for the next 10 years because you are a slave to your debt doesn’t make much sense. What are you proud of? An accomplishment that put your in current miserable state?

6.    Graduating from business school is a huge accomplishment that many can’t do.

At the end of the day, colleges and universities are not a charity organization. They have stakeholders and a bottom-line. Revenue is their top priority. I know this first hand as I sat in management meetings as a head of department. Keeping up standards in teaching and learning is not really discussed.

It’s actually quite simple. A failed student is not worth as much as a passing, paying student. 90% of college and university students are on student loans, so if the student passes the college or university gets paid pretty much automatically.

Higher education institutions have what are called a percentage of “failure tolerance” worked into their accounting. This means that they take into account students that do fail, up to a certain percent. But most colleges and universities set that percentage at only 8%-10%. Anything above that is unacceptable. Period.

Many professors are told not to give discouraging grades in the first 3 weeks of classes to prevent an increase in dropout rates. The first 3 weeks are crucial because most institutions set their add/drop date (the deadline to add or drop a class before having to pay for them) at the end of the 3rd week of the semester. Students pay by the credit hour so every dropped class counts. In the biz, teachers call this “Nothing below a C before the end of week 3”.

Graduating from business school doesn’t mean you are a genius. It just means you aren’t in the bottom 10% of your intake.

As you can tell, I’m not a fan of business school, and for good reason. I was in the business of education for far too long not to know what it truly offers.  A way to extend our carefree college lives and delay learning the things you really need to learn to excel in business.

We believe in alternative education and it’s the reason why we started The $100 MBA. I hope this post resonated with you. If it did, reach out to me and let me know.

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How to Sell Like Heisenberg

Selling meth is very bad. Let me just get that out of the way from the get go. But how the main character of Breaking Bad, Walter White- A.K.A. Heisenberg, SOLD meth was pretty damn good. Sometimes, you need to look past the actual product to learn important lessons. Keep this in mind when reading this post. Proceed at your own discretion.

Heisenberg taught me more about selling a product than any other movie, documentary, training program, or T.V. show (including The Apprentice or Shark Tank). In this post I’m going to share with you how you can sell your product like the fictitious legend himself.

Heisenberg followed 5 Rules that allowed him to sell the most powerful product his industry had ever seen. I’m going to explain each rule in detail and how you can implement each one with your products.

Rule #1: Quality is Everything

There would be no Heisenberg if his product were not of superior quality. He took pride in offering the best product the market had ever seen. He was a chemist and knew his product better than anyone else. He took production seriously and didn’t just rely on marketing and sales.

At one point his distributors argued that in his market, difference in quality doesn’t matter. Heisenberg knew better. He knew if his customers tried his product once, they would never go back to any of the competing products.

Real World Example: Wellness Formula is the only thing I will take when I feel sick or feel I’m about to get sick. It’s an all-natural herbal and vitamin complex that has proven to me over and over again, it works.

I never believed in any of these voodoo, all-natural solutions before. I went straight to the antibiotics in the past. But one day, Nicole was feeling very sick and the gentleman at the health food store recommended it. I took his advice because he swore about its effectiveness like it was a miracle drug. He was right and we’ve been hooked ever since.

I’ve never seen an ad for Wellness Formula in my life but I’ve never recommended something more than I have with Wellness Formula. I must have told at least 30 people about it. 

Wellness

Offer a superior product and the sales will take care of itself.

Rule #2: Hard Work is How it’s Done

Heisenberg didn’t just sit on his ass. He wasn’t just an ideas man and talked about what an amazing product he wanted to build. He got into his radioactive suit and got to work. He worked harder on his product than anyone involved in his business.

Real World Example: When Nicole and were working on The $100 MBA before the community went live, we worked like machines every single day for 3 months. Just straight-up hustle. I think we had a total of 3 days off during that run.

We wanted to offer a product where people would say, “I love this place. It’s so worth it.” We knew that if we didn’t put in the work, we would end up with an OK product and an OK product wasn’t going to cut it. Here is a shot of us on our last day of shooting our courses before the launch.

Crazy

If you want to sell a superior product then hard work is the price you’re going to have to pay.

Rule #3: Your Brand Matters

Everyone knew Heisenberg’s product instantly. It was the only crystal meth that that had a blue tinge. The color wasn’t intentional but he kept it blue because he knew his customers wanted ‘the blue stuff’ and it was synonymous with his quality of product.

Real World Example: Over the last 128 years Coca-Cola has maintained they’re branding. They learned the hard way the significance of their strong brand in 1985. They made the mistake with changing their branding to “The New Coke” briefly in April of that year and quickly returned to their original branding 3 short months later after an uproar from their customers.

Coca-Cola customers wanted “The Real Thing” not some New Coke crap. So they made sure they gave them what they wanted.

coke

What’s your signature? What is something once seen or heard, has people thinking of you?

Rule #4: Don’t Underprice Yourself

Heisenberg never underpriced or undersold his product. He knew what his product was worth and never compromised. He knew if he was patient, his customers would buy his product at the price he is asking for.

Real World Example: One of most successful cruise lines is Windstar Cruises. Never heard of them? That’s probably because they don’t actively advertise like other major cruise lines, like Carnival or Norwegian. They don’t have to.

They also cost about 10 times as much. But they don’t care. They do very well because they offer a superior product. So when cheesy musical performances and 1,000 people lining up at buffets aren’t going to cut it for you and you want the ultimate cruise experience, you’re going to look for Windstar. They are rank as one of the most profitable cruise lines in the world because they don’t undersell their product.

wind_star_4

Sometimes at the start, we want our product to sell so badly we underprice ourselves. Don’t make this mistake.

Rule #5: Always Plan for Growth

Heisenberg always looked to the future. He always looked at how he could expand and grow his business. He always thought big and planned for it. He started out in an RV but he soon outgrew it.

He knew from the start his superior product was going to be huge and that he needed to plan for success. He knew that thinking small would keep him small.

Real World Example: When Dollar Shave Club first launched with their hilarious Internet video commercial, they were shocked at the response of the market. Everyone wanted to be a part of their shaving blade movement. They almost couldn’t handle all the orders they received.

Luckily they planed for this and had an emergency expansion plan in place.

They quickly had to expand their business and hire more people to help fulfill the huge volume of orders they received and continued to receive after their launch.

Always plan for success. If you don’t expect to be successful then why are you in business in the first place?

Final Words

Your products, your offerings are what define your business. No one cares about your witty headlines if you can’t deliver the goods. Just think about your favorite products. Why do you love them? Probably because they are better than any other of their kind. Take extra care with your products and they will take care of you.

And remember, hugs are better than drugs.

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How To Be a Successful Entrepreneur. This Might Surprise You.

Every successful entrepreneur will tell you the reason for his or her success is one thing.  They created pure crap. Whaaat??? Let me explain.

If you haven’t created something you are embarrassed about yet, then you haven’t started the journey to becoming a great entrepreneur. Nicole and I had our share of failures that make us cringe, yet these epic fails were necessary for us to make and progress as business builders. More about these failures later.

Having success in business requires learning and much of that learning is by doing.

You have to try things out and feel your way around business. In the process, you will make mistakes; you’ll create less than spectacular things. Things you hope no one ever finds. But guess what? That’s a good thing. It may not feel good but it’s the merit and milestones of a great entrepreneur.

One of the major take-a-ways of Robert Kiyosaki’s book, Rich Dad, Poor Dad, is what he calls “fail fast.” It’s the concept of getting all your screw-ups out of the way. You will screw up and create less than exemplary work, so just get them done with. As the famous photographer, Henri Cartier-Bresson, once said, “Your first 10,000 photographs are your worst.”

Babies don’t just think about walking for a year and then just suddenly get up a walk like they’re Gene Kelly in Singing in the Rain (Google it those under 25). They start trying and keep trying.  They fall on their face a few hundred times before they actually can take a few stable steps. The point is they don’t take ‘No’ for an answer. They keep trying and make mistakes until they get it right.

When things go less than perfect, don’t see it as a sign that you’re not cut out for this- just the opposite. It’s a sign you are on the very path all successful entrepreneurs tread.

I promised you that I would share one of our valiant efforts, turned pure dodo.  Some time ago, Nicole and I started a short-lived YouTube series called BRTV. Those 4 letters make us cringe and make us want to hide under the nearest rock in embarrassment.  It was a disastrous project. It went nowhere and it’s no surprise. My delivery makes me want to vomit: who is that guy? Nicole hates looking at the video and audio quality of this production. It’s cheesy, idiotic and just plain horrible. The only upside of the video is that it shows us how far we have come.

As much as this pains us, we share this video with you to show that this is just a part of the experience. You have to have a handful of cringe-worthy projects that teach you who you are as an entrepreneur and how to become a successful one. Go ahead, I know you are dying to press play.

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5 Mistakes You Should Avoid When Starting a Business

With preparing for the launch of our podcast People Who Know Their Shit and running our community The $100 MBA, Nicole and I speak with entrepreneurs pretty much every day. We talk about all kinds of things. We discuss successes and struggles. What works and what doesn’t. We spend time with all sorts, from complete newbies to business online and experts with ridiculous levels of success, and everything in between.

We love our job.

One topic that comes up in almost every discussion is mistakes made when just starting out in business.

It makes sense. The beginners love to know which mistakes they should avoid and the veterans love to talk about the things they wish they could tell their former selves, knowing what they know now.

I decided to put together a summary of the 5 most common and critical mistakes you should avoid that people have shared with us on People Who Know Their Shit, along with the mistakes we see being made with new entrepreneurs inside The $100 MBA.

Here are the Top 5 biggest mistakes made when starting a business:

1. Getting stuck on the idea phase and never doing

This is hands down the number one mistake. No questions about it. The idea phase is usually where everything stops for new entrepreneurs. Here, they are greeted by an old friend of the seasoned entrepreneur, Fear. Fear tells you that someone will steal your idea so never share it. Fear tells you that not enough people will buy it. Fear tells you that you can’t pull it off.  Fear stops you from doing.

I say the following statement at least once 3 times a week: “Ideas are worthless without action. Without implementation you are just a dreamer and not an entrepreneur.”

You need to get out there and validate your ideas in the real world so you can see if they are viable businesses or not. Doing. You need to speak to potential customers and start crafting the best version of your idea. Doing. You need to start actually building your offering based on what you’ve learned. Doing.

Here is a little secret about business- everything is an experiment. Thomas Edison didn’t just sit and think about how to create the light bulb and then got it perfect the first time he took a crack at it. It’s been said that he used over 6,000 fibers to light his bulb. A reporter at that time asked Edison, “How many times are you going to fail at creating the light bulb?” Mr. Edison replied, “Son, I haven’t failed! I’ve simply discovered another way not to invent the light bulb!”

Bottom Line: Get to work. Validate and refine your idea (you can take our free course to show you how) and start hustling. As Edison once said “Genius is 1 percent inspiration and 99 percent perspiration.”

2. Choosing a topic you don’t care about

Building and running a business is hard. Most entrepreneurs we speak to say it’s the hardest thing they’ve ever done. We can definitely vouch for that. This is not to discourage you, but rather to drive home that you had better care, love, have passion for, be crazy about, the topic your business is based on, or you’re simply not going to make it. Pure and simple.

If you don’t enjoy your business day in and day out then you’re frustration will sooner or later overtake your desire for success, money or whatever you started the business for. Trust me. I’m speaking out of personal experience. It took me a few businesses to learn this and it hurt big time.

Also, if you don’t care about what you’re doing, it shows. Your audience and customer will notice and will take their time, money and attention elsewhere- somewhere that matches or exceeds their love for that same interest.

Bottom Line: Make sure you choose a business topic you would love to talk about and be involved in even if you didn’t need to make a dime. Seriously, think about it. Would you talk about that topic when you’re on vacation?

3. Being afraid to be different

Business is all about Why’s. Why should I pay attention? Why should I switch from where I shop now? Why should I subscribe to your blog?

If your answer to every Why is the same as everyone else’s, you’re in big trouble. Not being different is usually caused by the fear of not being respected in the marketplace. Nothing can be further from the truth. I told you Fear was a tricky fellow.

You need to offer something others don’t. That could be your style, your humor or even the fact you donate a healthy portion of your proceeds to an unrecognized cause. Just asks Warby Parker how well their business is doing because of their buy a pair, give a pair campaign.

 Bottom Line: Be different. Be yourself. Stop trying to be like your competition. It’s bad form and bad business.

4.  Not understanding what a business actually is

We need to get something clear right away. If you are not asking for monies in exchange for a product or service, you are not running a business. A blog is not a business. It’s a form of building relationships with your potential customers.

A business must have these 5 parts or it’s not a business. It’s a hobby, it’s a promotion tool, it’s something else- not a business.

  1. Creating An Offer
  2. Delivering An Offer
  3. Sales
  4. Marketing
  5. Finance

If you are not creating and offering value you do not have a business.

If you are not ensuring that you are deliver your value in an exceptional way, you do not have a business.

If you are not selling, you do not have a business.

If you don’t market your business in any form, you do not have a business.

If you don’t make sure your finances are in check- your profits are larger than your expenses- you do not have a business. (Yes, some businesses lose money but if they are not working on reversing that, they don’t have a business.)

Bottom Line: Know what a business actually is and make sure you are building one. Blogs are great. Podcasts are great. But they support a business; they are not a business in itself. (Yes, there are RARE exceptions to this.)

5. Doing it alone

No one does it alone. No one. The lone wolf always dies at the end the movie.  You need people to make it happen. Your customers are people, your suppliers are people, others in your industry are people.

Most importantly, you need help and support from other entrepreneurs who are at a similar stage as you are, as well as from those with more experience.

Recently, Nicole and I ran a short survey with our $100 MBA members to find out what they find most valuable about the community. The overwhelming majority mentioned that the support of the community forum was one of the most useful aspects of their experience. They found being able to get feedback and simply be friends with like-minded people was incredibly valuable and useful in their progress as entrepreneurs.

The more connected you become with other entrepreneurs, the more normal your feel about being one. You’ll no longer feel crazy or alone, and you’ll realize that we all face the same challenges, just in different forms.

Bottom Line: We all need others to grow and to succeed. Make sure you are a part of a regular mastermind group, meet-up, online community or whatever. Consider getting a committed business partner if you feel you need it to make it happen. I did, and never regretted it for a second.

Final Words

Take these mistakes made at the start seriously. If I had read this post when I started out 12 years ago, I would have probably saved a few years of learning the hard way and approximately $60,000. Seriously guys.

These are the top 5 mistakes made at the start, not all the mistakes that are commonly made as a newbie. But instead of writing you a 10,000-word post, I decided to focus on only the top 5 mistakes. If you found this post to be useful, share it via social media below and we’ll know we should write a part 2.

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How to Negotiate Like Frank Underwood

So if you’ve been watching the hit series on Netflix, House of Cards, then the title of this post gives you a clear indication of the caliber of a negotiator I’m taking about. If you’re not familiar with the series, Frank Underwood, played by Kevin Spacey, is the main character of the drama and is a walking manifestation of the best selling book 48 Laws of Power by Robert Greene.

Now let me clearly state I AM NOT advising you or endorsing any type of evil acts of trickery in becoming a successful negotiator. But there are some simple principles of negotiation that need to be understood if you are going to be a successful negotiator in business, or in life in general.

Frank Underwood always remains calm in a negotiation. Not because he’s a laid back guy but because he goes into every negotiation, big or small, with a plan. Frank understands that negotiation is an art and a science. It’s not all psychology; your charm and character play a major role as well.

So what does this have to do with business?

It doesn’t matter what business you are in; online, offline, retail, wholesale, eBooks or cattle for that matter, you will have to negotiate at some point. How do you do it effectively while remaining refined and in control? This post is going to be your practical guide to negotiating in business like a pro. Get what you want, be in complete control while keeping everyone happy. First, let’s define what exactly we mean by a negotiation, and then how to do so like a seasoned veteran like Frank.

What is a Negotiation?

By definition, a negotiation is a dialogue between two or more people or parties, intended to reach an understanding. In business, the stakes are often high. You’re not haggling at a flea market here. You are trying to reach an agreement that is perceived as fair to both parties. After all, you’ll be negotiating with people vital to the success of your business- your clients. Notice I said “perceived as fair.” Negotiation in business is all about perception. Perceptions are formed in the negotiation process. In essence a negotiation is a form of sales. The party you are negotiating with forms their perception of what they are receiving in the exchange solely based on what you tell them. So making sure you fully convey your value is vital. More about that later.

How To Act When Negotiating

When negotiating in business, you need to remember that the client has come to you because they want something that you offer. Automatically, that gives you the upper hand. You are the one in demand. Yes, you need clients and their money but how much you need them is a complete mystery to them. Master salesperson and good friend, Chris Johnson, taught me a critical rule: If the other party gets a whiff of any scent of desperation on you, you have lost before you have even begun. This is not to mean you treat your customers with arrogance and haughty aloofness. Always remain humble yet confident. Never cocky. You have to believe that what you are offering is worth far more than what the client will be paying. Even if you are selling a product that has a market price, the experience of buying it from you is more valuable than getting it elsewhere. Price is just one factor in the negotiation process. And for many, it’s not the most important. Remember that even before you enter the negotiation process with your clients.

Your Guide to Negotiating in Business Like Frank Underwood

Rule #1: Focus on the first 5 minutes

According to a study by The Journal of Applied Sciences, the first 5 minutes of a negotiation can predict the outcome. In this first 5 minutes people decide what direction they will take in the negotiation. More audibles are called here than in a New York Jets game. How you greet them, in person with a handshake, or on an email with your opening line, sets the tone. Make sure you smile and are likeable. If you’re doing business online, make sure your communication is positive and friendly. It’s a lot harder to say no to someone you like. Get right into why you think working together is a good idea and how their work/ business/ idea is a good one. Yes, people like praise but they love it when they feel someone understands them. A feeling of connection makes your value skyrocket. Frank is always on his ‘A Game’ the first 5 minutes of a negotiation. He only resorts to other options if he hasn’t won them over and is in complete control by the first 5 minutes.

Rule #2: Appearances still matter

Yes we are in an age of 20 year-old CEO’s, with their definition of dressing for a meeting being a hooded sweatshirts and track pants. But that’s a huge minority. If you’re negotiating in person make sure you look like you’re worth more than what you are negotiating over. Your get up for a baseball game with friends isn’t appropriate. Clean, ironed clothing that you would wear on a night out with your better half is however. This is a job interview of sorts. Looking sharp gives you an advantage from the get go. If business is being done online or over email, make sure your avatar is respectful and respectable. If you are not a kitten wearing Ray Bans then you may want to consider putting a photo that is more becoming. Yes, Frank works in the most professionally dressed profession on the planet but he’s always looking sharp when he enters a negotiation. Sleeves never rolled up, shoes always shined, not a crease in sight.

Rule #3: State what they are ACTUALLY getting

The value you offer is not immediately obvious. You know your business very well so you think what you offer and what value you give is obvious. Know that it is not. It’s your job to make sure that your customer knows even well before you discuss money, what they will actually be getting when working with you. It is not only the product or service you will be delivering but the manner in which they will receive it. Your business may be more conveniently located, you may offer outstanding service, you may have a better return policy, or simply genuinely care more about your customer. Whatever it is, the value you offer needs be completely clear so that when price is mentioned, your price is not only justified, it’s a steal. Frank, never undersells what he is offering- just the opposite. He paints the picture of the other party’s new reality after they agree on the deal. How they will appear amongst their peers and how it will make them look. He makes sure he focuses on benefits rather than features.

Rule #4: State your price. Don’t ask for permission.

Now that you have conveyed the value you are offering, you must state what you are worth. When quoting your price be cautious of how you deliver it. This is applicable in person or over email.

How NOT to do it:

We would have to charge $10,000 for a website like yours. This is because we want to do the very best job on your project. How does that sound? So why is this unfavorable? Firstly, “we would have to” sounds like you are doing something that is painful for them when in fact you are giving them a value-laden bargain. Secondly, associating your fee with the quality of work, “best work” in this case, implies that your work has a quality to price scale. It implies you can do the job for less but it just won’t be as polished. Lastly, ending with “how does that sound?” puts you in a position of weakness. Why would you need to ask for the client’s permission to give them amazing value at an incredible price?

How to do it:

Given all the details we discussed, our fee is $10,000. We are excited to begin work on your project. Once a deposit is paid we can schedule to begin work this week. Frank does nothing weak. His tone of voice is firm yet friendly. Yes, he has the advantage of having a South Carolina accent but you can smile just as widely as he does.

Rule #5: Know when to stop talking

After you state your price, STOP TALKING. Don’t begin a ramble of justifications and reminders as this makes you look needy and unsure of yourself. Allow your client to think and ask questions. This keeps you in a powerful position. If there is a gap of silence, don’t feel the need to fill it with any kind of chatter. The ball is in their court so if anyone is obliged to speak, it’s them. Keep calm, positive and wait. Frank always uses awkward moments of silence to his advantage; forcing the other party to break it with agreeing on the deal. He never feels forced to talk. Everything is accounted for.

Rule #6: Create Urgency

If there is no pressure to close the deal, there is no reason for the client to take action soon. Make sure you are honest with them and let them know, as shown in the example of stating your price, the deal is time-sensitive and it may not be available if they don’t act quickly. That’s why every retail store’s sale has a deadline. You may want to do the same. Jay Abraham teaches this point brilliantly in his book Getting Everything You Can Out of All You’ve Got. I highly recommend it. Frank always makes the other party feel like his offer is a once-in-a-life time opportunity and if not acted upon quickly, their moment of glory will be gone. Missed opportunities are painful; Frank knows this and uses it to his advantage when negotiating.

Rule #7: Create Scarcity

Make sure your clients know you get booked up quickly or your products get sold out very fast without looking like a shyster.  Again, just be honest: “I know as of today I’m available the last 2 weeks of February to work on this project. But this may change tomorrow.” Frank always makes sure the other party understands that not everyone has the opportunity to work with him and those who do never regret it. Even his enemies know it.

Rule #8: Allow room to make them feel like they got a deal.

Some people just don’t feel like they got a deal unless they get some sort of discount. They want to go home feeling they got a bargain. This is why it’s wise to leave a 5-10% buffer in your price. You don’t want to give it to them as soon as you see some resistance. If they don’t immediately accept your offer, you may want to just ask them what their budget is. Their ‘budget’ will be the price they want with the ‘bargain discount’. This will be a bit lower than your pre-buffered price but meeting somewhere at your buffered price will be the sweet spot. Frank always makes the other party feel like they are in control and that the decision they make is theirs. The reality is he is the one that sets the options; so no mater what the other party chooses, he wins.

Final Advice

Remember, just because it’s business and big stakes may be involved, it doesn’t need to be stressful. Knowing that you have a plan puts you way ahead of the pack. You can now go into your next negotiation with a new set of skills and the confidence of a seasoned veteran like Frank Underwood.

Follow up Reading

Your negotiation training doesn’t end here. Here are a few books you should pay serious attention to.

Books:

Getting a Yes by Roger Fisher
Book Yourself Solid by Michael Port
How to Win Friends & Influence People by Dale Carnegie

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