(VIDEO) This Strategy Will Help You Negotiate Better With Just About Anyone


(VIDEO) This Strategy Will Help You Negotiate Better With Just About Anyone

If you don’t know your BATNA from your WATNA and you’re about to start negotiating, then take some time to prepare yourself before you engage in conversation. This could make the difference between being satisfied with the outcome or being frustrated, angry or annoyed with the outcome.

Before we go any further, let’s make sure we all understand BATNA and WATNA; here’s what they stand for:

  • BATNA – Best Alternative To a Negotiated Agreement and 
  • WATNA – Worst Alternative To a Negotiated Agreement.

BATNAs make you consider what is the best alternative available to you if you walk away from a negotiation and WATNAs make you consider what is the worst alternative available to you if you walk away from a negotiation. Sometimes you will have a lot of alternatives and other times you may have none. The more BATNAs and WATNAs you have means the more power you have to accept or decline the offer in negotiation. Let’s put this into an example:

The story begins…

Here are some details about a proposed negotiation:

  • Celia wants to buy Paul’s business
  • Celia’s maximum spend is $250k
  • The minimum Paul wants is $310k

But let’s take a closer look and see how BATNAs and WATNAs come into a negotiation.

The plot thickens

Celia has been looking for a business with a strong customer base and with working systems and processes in place and believes Paul’s business has all of that. There is one other business similar to Paul’s (that owned by Joe) but it isn’t as well as known as Paul’s and she would need to expect to keep building the clientele in the first few years and Joe’s systems aren’t as yet, as effective as Paul’s.

Paul has enjoyed building his business and is now wanting to sell it due to the ill health of his mother; he needs to relocate to live-in and care for her. Only Paul’s family know of his reason for wanting to sell. His business has been on the market for three months and there has only been one offer before Celia’s. His mother’s health was steady but now she is starting to decline and in a best case scenario, she will need a live-in carer in less than two months.

Identifying BATNAs and WATNAs

Let’s look at Paul’s BATNA – his asking price is $310k and if he says no to Celia’s offer of $250k his Best Alternative is to hope another offer will be made by someone else in the next two months. Considering there has only been one offer in the last three months, this isn’t something Paul can expect. Paul understands he cannot rely on another offer coming through in time – he needs access to the money when he moves and he doesn’t have a better alternative at this point in time and this weakens his position in this negotiation.

Initially, Paul planned to sell his business within six months but his mother’s declining health has changed things. Now, time is no longer on Paul’s side to wait for a buyer with $310k to spend. Paul needs to consider his WATNA – his Worst Alternative. If he rejects Celia’s offer now, he doesn’t know when or if someone else will come along. His WATNA to Celia’s offer could be to not sell and wait, but he needs the money when he moves.

However, Celia doesn’t know about Paul’s urgency and his need to move, and this is in his favour.

Paul also needs to consider what he thinks Celia’s BATNAs and WATNAs are as this can impact his decision making. He is aware that Joe’s business is for sale at a lesser price and that Celia has also looked into it. He also knows his own business is set up more efficiently and with a broader client base. Celia has stated that she only has $250k to spend but of course Paul doesn’t know if this is her real maximum. Paul must realise that if he won’t lower his price, Celia’s BATNA could be to buy Joe’s business – she could walk away from Paul’s business.

A final tip

Before going into a negotiation, make sure you always know your BATNA and WATNA and always consider what the other person’s BATNA and WATNA could be. It’s important when considering someone else’s BATNA and WATNA that you realise it will be rare for you to know all of their information which impacts their decision making. By all means, it’s wise to consider what their BATNA and WATNA may be, but never assume you know everything about them.

When it’s time to make the final decision, you’ll know what you really can/have to accept and know you’ve achieved what’s best for you, at that point in time with the knowledge you had available.

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