Steps to Growth Capital Investor Readiness Skills

3.5 Use a Structured Approach

A structured approach to conflict resolution can help you reach a win-win agreement in your negotiations. The following approach is simple, easy to follow and logical. You should apply it during negotiations when the situation arises. It will instill confidence in the investor that you are a businessperson committed to building collaborative solutions.

Like any approach, the following one is designed to be a guideline. Adapt it as you see fit. Apply it not only during negotiations but also in your daily operations.

The diagram below shows this five-stage approach:

The Five-Stage Approach

Open Discussion of Problems

During this stage, both parties should feel free to express any concerns that they have, without fear of being ridiculed or judged. You can't expect to deal with your concerns if you don't discuss them, regardless of relative importance. Communicate fully. This approach can be a long process.

Remember that you're setting the tone for any future meetings or transactions, so you want to establish an environment of openness and honesty. This will also facilitate trust building with the investor.

Identify Differences

Imagine if a deal fell through because you and the investor thought you had incompatible goals but, in reality, you didn't. That's why it's so important to separate real from perceived differences in opinion. Be prepared to explain the rationale behind your demands so that you and the investor can determine if you have different interests (a true conflict) or just different ways of getting to the same result (perceived conflict).

Conflict arises from a difference in opinion or values. The cornerstone of dealing with conflict is understanding the gaps between your desires and those of the investor. You need to do this before you can bridge these gaps.

Build Understanding for Point of View

You need to gain an understanding of the investor's needs and ensure the investor understands your point of view. Conflict resolution techniques that focus on positive outcomes of conflict may help you approach the issue from a more workable angle. Here are some intervention techniques that you can use.

• Try to understand the other person's point of view. Listen to the investor without trying to think of what you'll say next. Focus on the investor, giving your full attention.
• Acknowledge that the investor has a point of view. Do this even if you disagree with it.
• Use open body language. (Maintain eye contact, nod in agreement.) Physically show your willingness to be reasonable and open to discussion. Whether you're listening or speaking, you're still communicating silently with the investor through your body language. Your audience responds more to what your body is doing than to what you are saying so try to synchronize your actions with your words. Together they can transmit your message much more clearly than each one can individually.
• Initially focus on points where you and the investor agree. That way you won't waste time discussing those points. Tell the investor which points you agree with and why. Ask the investor to repeat the process for you.

Reduce Defensiveness

When someone triggers one of our emotional "hot buttons", our instinctive response is to defend ourselves by counterattacking. When we're defensive, it's difficult to see the situation objectively — our logic is clouded by our emotions. This can create a vicious cycle of increasingly hostile exchanges with one party trying to outdo the other.

Defensiveness can be detrimental to the relationship because the focus switches from common goals to individual interests. There are several ways you can break the cycle of defensiveness.

Disengage. Back off for a bit.

Empathize. Express an understanding for the other side's view.

Inquire. Ask questions focussing on the situation, not on the people involved.

Disclose. Use "I" statements to tell the other party how you interpret things.

Depersonalize. Separate your identity from your tasks/work; you're not the company, you're an officer of the company.

When challenged during negotiations, you'll probably feel personally attacked. Many of the issues causing a difference of opinion were based on your earlier business decisions, the same ones that you thought were brilliant at the time. Don't take things personally. Minimize your defensiveness. Ensure that you don't lose your cool, and keep focussed on your goal: successfully negotiating an investment deal.

Begin Mutual Problem Solving

The binding thread for all the conflict management techniques is trust. If you have a good relationship with the investor, both of you will want to work toward a mutually beneficial agreement. You'll likely feel more comfortable using some of the strategies mentioned in this Step, like effective listening and open body language, in order to achieve total understanding. Most of this adaptation will be done subconsciously as your relationship with the investor improves and your communication and business development skills are enhanced.

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