Rudolphi's Burning- July Edition

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News From The Coffee Shop

July 15, 2012 3:36 PM

"It's not personal...It's just business"

 A few years ago when I was selling machinery, I was dealing with a contractor on a skid loader.  Through the years he and I had developed a good business relationship.  On this skid loader, we spent a lot of time demonstrating several different machines, visited about features and price levels, and eventually nailed it down to what machine would be the best fit for him.  We then dialed in the price, arranged for financing, and signed the purchase agreement.

When I showed up on his jobsite a few days later to deliver the machine and sign the finance documents, I was stunned to find a brand new skid loader of another color sitting there.  I asked what was going on, and he informed me that he received such a good deal on the other machine that he could not pass it up, and wouldn’t be purchasing from me after all. Due to the time, efforts, and resources that were put toward getting this deal done I was pretty disappointed (Ok, just downright pissed off!) and I let it be known!  He then replied with a big grin on his face… “Hey, it’s not personal….it’s just business!”

“It’s business” is the universal cop-out to get the upper hand in a negotiation.  In saying this, one seemingly excuses themselves from all professional courtesy and opens the floodgates for all negotiating tactics. I believe that this phrase would be more accurate if people proclaimed, “It’s not personal… I’m just an asshole!”

“Business” is the word that brings the gloves off.  Often times this is a mere caveat for a person to flex their muscles, lever the situation, and tip the table in their favor.  So why hide behind “business”?  Why not just come out and admit it?  Sometimes you have to be a jerk to get stuff done.  Consider this; most private business owners pour their heart and souls into their companies.  When you choose to do business with them, it can’t help but get personal.  Like it or not, business is personal.

I’m not advocating that anyone should be a pansy in regards to negotiations , however it is important to consider that not all transactions are the same, and thus do not always warrant the same approach.  Let’s explore a couple different types of transactions, all of which have their appropriate place in the world.

Win-Win
In a win-win deal everyone leaves with a feeling of satisfaction that a fair agreement was put into place.  More than likely at the negotiating table each party stood firm on certain topics, made concessions on others, and came to a compromise that made profitable sense for both businesses.  Due to the nature of this type of agreement, one could realistically expect additional benefits to go along with the deal such as personal service and timely attention to needs.

Win-Lose
In a win-lose deal the “winning” party effectively out negotiates and leverages the other.  The “losing” party often times concedes to the terms of the agreement out of urgent necessity, lack of choice, or as a last ditch attempt to keep the business.  The winners in these agreements must often times commit to being self sufficient and not reliant on the services that often times come with a sale, must be flexible on when the services can be performed or delivered, and live with the fact that they and their organization are “difficult to do business with.”  

Lose-Lose
Pretty self explanatory.  I’d just recommend trying to avoid these types of deals if you can.  These usually start out as something else, but due to unforeseen circumstances, develop into a bad situation for everyone.  Please reference deals such as Solyndra or Iowa Quality Beef for examples in this area.

Making the Distinction
Sometimes you might see an opportunity to use multiple approaches to the same end.  After all, there is more than one way to skin a cat!  

For example, in the business of fertilizer sales, markups and margins vary greatly from vendor to vendor. I work with two different types of suppliers; brokers and traditional full service suppliers. In dealing with brokers, the product is always a lot cheaper, but I have to be committed to taking the product when it is offered, take the storage risk, and be accepting that there will be no consulting or additional services with the sale.  I choose to lean on these guys…hard.  I like to scrap for every last dime that I can squeeze out of them.  In these negotiations, it’s not that I want the other guys to lose, but I certainly want to make sure that I have won.  Full service suppliers command higher margin for the product, but are willing to accommodate aspects that the broker will not and even go the extra mile when necessary …such as delivering to the field at 6:00 PM on a Saturday night if I get in a bind or plan poorly and run out.  It’s an added convenience that I am willing to pay for on a certain percentage of my fertilizer needs.  At some point I will need them to jump, so in order for them to respond “how high?” I find it necessary to be more accepting when it comes to the negotiations.

Each operation is different and has different capabilities and needs.  Understanding your needs and capabilities can help you in maximizing the effectiveness of your approach to the marketplace when negotiating agreements with vendors.

Tomorrow my wife and I will celebrate one year of marriage-Happy Anniversary Tara!  With that, I’m reminded of a discussion that we had a few years back when we were first talking about getting hitched.  With her having a professional degree, and me having worked for several years already, I proposed that we should look into a pre-nuptial agreement…you know…heaven forbid.  This idea was met with a lot of opposition and even a few tears.  So assuming the attitude that you have to have faith in something, I relented.

Well, fast forward to 2012, and I overhear her agreeing with one of her girlfriends that pre-nups are indeed a good idea.  So I called her out on it, suggesting that she really had a change in perspective over the last couple of years!  At which point she looked into my eyes ever so sweetly and exclaimed, “It’s not personal…it’s just business!”

Somebody get me some water…cuz we got a fire!

Editor's Note:

The mission of the column is to advocate agriculture, entertain (provided that you are entertainable), serve as a catalyst for critical thinking, and challenge the status quo amongst the agricultural community.

Rob Rudolphi resides in Eastern Iowa with his lovely wife Tara, where he is involved in varying facets of several agricultural businesses. They currently have no kids, no dogs, and certainly no cats, and are generally up for anything involving a good time!

If you have a idea that would make a good "Burn Topic" for next month's Rudolphi's Burning column, please email the idea to prburmeister@gmail.com All entries will remain anonymous.