“Negotiation Risk Aversion Can Be Costing You Opportunities”



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To what degree are you risk adverse and what’s the cost for being so? You’ve more than likely heard the cliché, “nothing ventured, nothing gained”. That’s true, but what guidelines should you consider when assessing how much risk you should incur? The following suggestions will help you make that determination in your negotiations.

I was watching a recent episode of the TV show, Shark Tank; in case you’re not familiar with the show, entrepreneurs pitch investors on investing in their business. One of the entrepreneurs sought founding for her business in the amount of $360K, for a 30% share of the business. The investor offered her the $360k for 40% of the business. She countered at 35% and the investor said yes to her counter and the deal was closed. When she made her counteroffer, I thought she’d blown the deal, because all of the other investors had already dropped out and the one that accepted the deal was the last investor left. Thus, that was her last chance to get a deal. I thought to myself, I would not have risked not getting a deal and would have forgone the opportunity to maintain the additional 5% that she got, due to her counteroffer.


The mitigating risk factors I considered were:


1. There were other people observing the negotiation, which added another dominion to it. Such a factor had an influence on the investor that accepted the deal. When you’re negotiating, always consider intrinsic factors that might be influencing the negotiation. Even if they have no direct input, just because they’re invisible doesn’t mean they’re not valuable. Consider how you might recognize, take into account, and deal with such unseen circumstances.

2. In stating her case as to why her request for the additional 5% should be granted, she cited her service in the U.S. armed forces and mentioned that she’d served several tours of duty in foreign wars. She was highlighting her patriotism to the country and that caught the attention of all of the investors. When you’re negotiating, always have thoughts and ideas at the ready that might sway the other negotiator to abide by your wishes. If you can invoke his emotions, you’re more likely to sway him.

3. Prior to entering into a negotiation, assess the degree of risk you’re willing to accept and know your stop points; this can partially be adhered to by bracketing the outcomes you’re willing to accept prior to entering into the negotiation.

4. Keep your emotions intact. Sometimes, the best deal is no deal. If the circumstances are not right for right now, don’t force an outcome that may be difficult for you to live with, or one that won’t serve you well.

Risks are inherent in everything we do and in every situation we encounter. Depending on your ability to endure risk, you’ll make or lose opportunities and/or money. By following the suggestions above, you can mitigate risks to some degree and still have your negotiation effects prove to be beneficial … and everything will be right with the world.

Remember, you’re always negotiating!


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