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It also means being able to draw a line in the sand that the other party sees and accepts. If they won’t go along with it, be prepared to abandon the discussions. Don’t accept half-baked agreements that can be changed at will.

The situations and analyses in this article demonstrate you must tough it out to succeed. They are based on real examples known to the author, and they should help you learn how to get the best deal during your business life. The Small Business Administration states that small businesses often fail because of unrealistic expectations. Don’t let this happen to you.

Get With It!
Let’s start the ball rolling with a situation that can confront the first time entrepreneur. You have worked hard putting your operation together. You have the support of your family, your co-workers, and your prospective customers. There is just one more hurdle you must jump before you launch into the world of commerce — you need to nail down your first order.

The trouble is, you’re not a wheeler and dealer. Your first customer calls all the shots. He haggles about quantities, delivery dates, prices, and quality for weeks. You bend over backward to satisfy him, because you want his order badly. Time passes, money gets spent, but nothing comes in. He makes you feel that you are very small fish in a very large pond. Why is this?

Characteristics of U.S. Home Businesses
Some home business owners stumble from one crisis to another, while others grab opportunities, learn to cope with conditions, and refuse to give up the ship. You must play up your strengths and downplay your weaknesses. Below are the good attributes of home businesses:

·        Dynamic, future looking, and good for the economy.
·        Flexible and able to act quickly and decisively.
·        Owners know most aspects of their business.
·        Able to offer competitive products and services.

Here are the not so good attributes:
·        Fragile, not well financed, poor at negotiating.
·        Likely to disappear as quickly as they began.
·        Lack backup expertise and resources.
·        Not used to dealing with business professionals.

Strengths in the first area are often offset by problems in the latter. Become a street savvy home business owner by:
·        Realistically analyzing your prospects for success.
·        Having confidence in your plans and your ideals.
·        Fighting to stay in business no matter what the odds.
·        Learning that being a hard-nosed bargainer can be fun.
·        Avoiding disappointments and cultivating opportunities.

Read the following case histories, and study the analyses that follow them. Try to apply them to your own home business experiences.

Money Matters
Bill Smits wants to hire an engineer to help him develop his home-based product idea. He asks two family friends to cover his costs in exchange for a share of the company. Bill’s enthusiasm wins them over, and he gets the money he needs. Two years later, the product is still not ready, and repeated infusions of cash do not seem to help. His friends are left holding the bag, and he gets the blame. Could Bill have avoided this situation?

Having friends and family fund your operations carries risks for you. They’ll often invest even if they don’t know what you’re doing, because they like you. Having an expert recommend a funding source is a much better strategy. Know your business inside out. Have confidence in yourself. A banker once told the author, “I decided to fund you, because you knew your business and your market. You were enthusiastic about your plans.”

Joint Venture
Your best friend comes to you with a business proposal. You have worked with him for years in his role of PR manager for one of your customers. Now he runs his own home business. It does okay, but it is not wildly successful. He suggests you and he join forces and run a joint venture that combines both your strengths. You’re tempted as you’ve had some great times with him in the past, but you’re not sure of his track record now. Should you go along with his idea?

Think carefully about your friend’s request. You work well together in your separate line of business, so why change that relationship? Friendship aside, consider who contributed most to the successes you’ve had up to now? You may be confusing the fun you have on the road together with what he brings to the table. Is he hoping to ride on your coat tails? Ask people who have worked with you both — you may be surprised at the answers you get.

Hidden Agendas
As a home business owner, you volunteer to join a team of business people from local manufacturers who plan to introduce a new type of consumer product. You are flattered to participate and think you’ll have an inside track on making a key part of the product. Then you find out that two members of the team belong to companies that are about to merge. When they do, they will be able to make the entire product. Should you continue to be part of the team?

Although it can make good sense to work on a volunteer business group, such bodies often are rife with politics and hidden agendas. When other members represent companies that work in the same line, things can get sticky. The time and talent you expend are valuable commodities. If your home business doesn’t benefit in terms of either sales or exposure, there is little point of staying on the team.

The Double Cross
Home-based consulting engineer, Mary Yuan, gives small telephone service providers product advice. A large firm hears about the success she has had helping other companies, and it invites her to sign a one-year agreement as its advisor. The firm’s first assignment is the layout of an antenna system that she is able to do in a few weeks. The second job is outside her field of expertise, and when she doesn’t do it quickly, the firm cancels the contract. What did Mary do wrong?

She didn’t do anything wrong — the big firm did. The scuttlebutt around town was that her home business had solved similar problems for other customers. To get Yuan on the cheap, the large firm cooks up what looks like a long-term deal, then dumps her as soon as she finishes the job the firm really wants done. Her problem was not being savvy enough to figure this out. She should have accepted only the assignment she was good at and charged the going rate for it.

The Failing Customer
Your home business starts with a bang, and you make money from the word “go.” A customer you’ve done business with, who sold his previous company, asks you to fill a sample order for a start-up. Your parts pass inspection, and he dangles the prospect of a much bigger order. The trouble is, the check he sent you for samples bounces. He replaces it right away claiming it was bookkeeping problem, but you have your doubts. Should you stick with him?

The answer is a big “no.” If he has trouble paying for a small order, how can he pay for a big one? Business checks don’t bounce by accident often, and this is a major red flag that your customer is in trouble. Don’t drop him right away, however. Visit his new company, and get a feel for how things are going. A skill that all home business people should have is the ability to sum up customers and see if they are for real.

Changing the Ground Rules
Your home business made a name for itself by doing a good job for a large company. The executive you worked with on that contract is then hired as the CEO of a smaller rural company in the same business. She invites you to work for her again, and you go in like gangbusters, but then find that you are dealing with a slow moving family-owned business and a newly-hired manager. Should you struggle on, or abandon the contract and lose money?

This is a difficult decision for any home business owner to make. You like and trust the executive, but it’s obvious that she has her hands full managing the new firm. You’ll have to rely on your common sense for this one. Get her on the phone, and tell her that you don’t think you can do as good of a job for her as you did before. Tell her why and see how she responds. If she wants you to stay on the job, offer her ideas on how to get rid of the roadblocks. Otherwise, drop the whole thing.

Wrapping It All Up
Study “Seven Steps to Business Smarts” (sidebar on page 46), and put its recommendations into effect. You may not be a natural street fighter, but you can learn to be better than you are. Driving a hard bargain means knowing what you want and fighting for it. It doesn’t mean being nasty or unpleasant — that won’t bring you a dime. It means demonstrating that you have the will to win!

Try putting yourself in the shoes of the person you are bargaining with. Does the person see you as a pushover or as someone who knows your business and is prepared to fight for the best deal? Many home business owners fear that hanging tough with the customer will lose them the order. Maybe it will, but in retrospect, would they have really wanted it on the customer’s terms anyway?

Plan ahead for the next time you have to negotiate. Assess your skills and those of your home business. If you were dealing with yourself, what would you think? “What a wimp this guy is, he couldn’t negotiate himself out of a paper bag!” Or, “Not only does this person know his business, but he knows mine pretty well, too. His company makes a good product and anticipates a good deal. I guess he’s earned it.” HBM