"TA Key Private Lender Negotiating Tactic”

How I only wish every single private money deal went perfectly according to plan.

Sometimes they do. Other times...well...let's just say there's a reason why they say "nail biter."

Today I want to share a negotiating tactic with you that has been successful for me. Like most things that work in business, it's more simple than complicated.

Bruce Lee, the great martial artist, was once quoted as saying: "It is not daily increase but daily decrease. The height of cultivation always runs to simplicity."

Write that one down.

Onward...

Now, a response you may hear from a prospective private investor is something along the lines of: "I'm not sure."

This can be a real killer. It can take the wind out of your sails. If you prepare for it ahead of time, you can prevent this momentum stealer. Here's how...

What I have done in this specific situation is reply with: "Ok. Are you saying that you are comfortable with the investment, but just not sure about the amount?"

By saying this, I've accomplished a few important things. First of all, I verbally presumed that they are "in" but just trying to figure out the right amount. At this point in the conversation, the investor may or may not have mentally committed to the deal. But, by my saying this, the investor can only think that they gave every signal that they were interested.

The other thing this phrase will do is it will let you know for sure if the investor is going to raise additional objections. They might stop you and say: "no. I'm not quite comfortable with the investment. Can  you explain more about ___." This is a good thing. Remember, if prospective investors raise objections, it means that they are emotionally interested (which is critical) but they are struggling to justify their desire to invest with logic. Worry about it when no objections are brought up.

Another very important development will occur when you say: "...so, you're comfortable with the investment but not with the amount?" What will happen is, you are giving the investor a chance to get in a little bit lighter then your (hopefully) already stated investment mimimum.

You should always tell your investors that there is a minimum figure to invest in your deals. Right now that number is $100k for me. It used to be $50k, then it was $75k and then it moved to $100k. It may go up again in the near future. By setting that bar, you are signaling that people shouldn't waste your time if they can't really place the funds you require to complete your business objectives.

When you set a minimum amount up front, but indicate that you might make an exception for the new investor, you can gain an edge. If the investor says "yes, I'm interested but just not sure about the $50k investment..." you can immediately counter back by saying: "Ok, Mr./Mrs. Investor - what amount would you be comfortable investing?"

Now, you've won.

They've already said "yes." It's very psychologically difficult for them to break the pace now and reverse position. In fact, I've never had it happen to me.

If this sounds like too much of a "rough and tumble" negotiating tactic to you, sorry. Sometimes it really comes down to these situations and you have to have some tools in your arsenal to capitalize. You rarely get a second chance with a "hot" investor. Don't take on an adversarial role, but stick to your guns and remember your goal: to get the funding.

-Happy Investing