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How to protect your profits

Protecting ProfitsA “take” initiative is where an organisation decides to go after a chunk of cash by forcibly renegotiating terms. It’s a one-dimensional negotiation aimed squarely at taking money from your bottom line, and putting it on theirs.

Right now there’s a lot of it about – if you aren’t on the receiving end of at least one already, you probably soon will be. When it happens, you need to be prepared for a bumpy ride.

If you think you can use collaboration and relationship-building to avoid confrontation, forget it; you can’t collaborate with people who are intent on competing against you. You have to match them competitively first before you can hope to lead them into any form of collaborative dialogue. And that means following the same four steps they’ve used to prepare their “take” in the first place:

Training: When I first became a buyer, my employer spent £3,000 training me in negotiation. I probably recouped that five times over in the first week back. It never ceases to amaze me how many untrained negotiators are out there. It’s step one in making and resisting a “take”.

Tools: For Local Authorities it might be the Care Funding Calculator, for retail buyers it might be a Category or Trade Terms Review. These tools focus their negotiators on the weaknesses in your current deals, whilst giving them the factual ammunition to shoot holes in all of your arguments. Going in without your own equivalent is like landing on the Normandy beaches in nothing but your pants.

Targets: Every successful “take” is driven by a big financial target. If your target is to minimise your losses, you’ve lost before you start. To match your counterpart, you need to set your own “take” target and commit yourself to winning the fight. Only then do you have a chance of reaching an even settlement in the armed truce that will follow.

True Story: The first rebuttal to a “take” will always be the moral argument, so to justify it you’ll need a genuine rationale. Theirs might be government cuts, overseas expansion or increasing costs. It’s fine to attack their story, but you’ll also need one of your own, and the more factual, demonstrable and widely recognisable it is, the better.

BOTTOM LINE: Failing to prepare is preparing to fail, and if you’re not prepared to fight off a take, it’s you who’ll be taken to the cleaners.

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