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Experts
Consider best, worst positions
NEGOTIATION | STEVEN BROWN
THE purpose of entering into a negotiation is for you to inter-act with other party. Your lawyer or if there is a conciliator can assist you to move through three stages by focusing on: 1. Opening up channels of communication; 2. Using the channels of communication to develop bridges of understanding between the parties of each other’s perceptions of the dispute and their respective strengths and weaknesses; 3. Structuring a negotiated resolution of the dispute.
The fi rst two stages–communication and understanding–overlap to a greater or lesser extent.
Both are directed towards enabling the parties to discuss their dispute, to exchange views and thus more fully to understand their own and, very importantly, the other party’s points of view.
A party is free at any time to end a negotiation simply by announcing they are withdrawing.
This does not involve any adverse consequence such as having to pay costs or being prejudiced by anything that may have been said, or even tentatively agreed, during the discussions.
If the negotiation succeeds the parties ordinarily sign a legally binding document setting out the terms of settlement of the dispute.
Oral settlement agreements should not be used as they can themselves give rise to disputes.
Rarely, the parties prefer not to enter into a legally binding settlement agreement, but to re-build their relationship having achieved a satisfactory understanding regarding the matters in dispute. If the negotiation fails neither party’s rights are not aff ected in any way. In most cases the parties reach a negotiated settlement. In the small number of negotiations that fail are some in which, even though no settlement has been reached, the discussions clarify and narrow the issues in dispute.
Ultimately it is for the parties to decide what settlement they can accept rather than pursuing whatever other courses that may be open to them.
Each party has to ask itself whether the available negotiated outcome, although disappointingly worse than it had hoped for, is nevertheless an outcome it can live with, rather than pursuing other courses open to it.
The often mentioned ‘win win’ ordinarily comes not from the terms of the settlement but rather from the fact that the settlement enables both parties to put the dispute behind them.
You will see that I do not mention anything about mutuality or happiness; rather what is more often achieved is a settlement that both parties will live with rather than are happy about.
Negotiation is about you and the other person expressing your views in an orga-
THREE KEY
QUESTIONS
Ask yourself these three nized manner to attempt to achieve an questions before entering agreed outcome. negotiations: Negotiation should be planned and • What could I get? • What should I get? thought through. You need to consider what is your best position, what is your worst position so that you can compare • What must I get? and put off ers on the table bearing in mind three things: • What could I get? • What should I get? • What must I get? In entering any negotiation determining the could, should and must of your position is essential. Without knowing what these things are you are not able to compare off ers on the table.
Steven Brown is Chairman of Etienne Lawyers. Visit www.etiennelaw.com
Importance of being Finance Fit
FINANCE | JOSEPH ESSEY
ASW a Virtual CFO, one question I often hear from SME’s is why they need a finance manager or a CFO when they already have an accountant?
The answer to this lies in understanding the value to businesses of being what I like to call fi nance fi t all year round.
Much like the human body, a growing business needs regular and deliberate care and attention to remain healthy and for a business to maintain performance at an elite level it needs more than the traditional annual check-up to keep itself fi t and able to reap the benefi ts of this.
What is Finance Fit?
A business that is Finance Fit typically has an ordered system for managing its accounts, is receiving up to date and in depth understanding of its fi nancial performance and has the management of its fi nances directed towards executing its broader strategy and achieving its goals. While a business that is Finance Fit often is performing well in terms of traditional key indicators such as sale growth, profi tability, and free cash fl ows these are not necessarily determinative of a Finance Fit organisation. The real keys to being Finance Fit is that your fi nancial position supports your strategy and that you have a deep understanding of the risks and trends in your business and a plan for managing these.
Why is this important?
Businesses that are not on top of their numbers or managing their fi nancial position in line with their goals are most likely leaving a lot of value on the table. A Finance Fit business is in a much better position to identify and take advantage of opportunities that are available to them as they have a clearer understanding of the things they need to be looking for and are getting the quality information they need to identify these early. For example, a difference between identifying and reacting to upwards trends in input costs of just 3 months can result in thousands if not tens of thousands in sacrifi ced profi ts, depending on the size of your business.
Also, as any experienced business owner can attest to, prevention is far better and less costly than the cure. You would much rather be compliant before the fact and invest upfront in being adequately prepared then be scrambling to get your fi nances in order at the last minute and risk paying what can be a signifi cant penalty.
How do you become Finance Fit?
The fi rst step to being fi nancially fi t is to establish the goals for your business and to have a clear strategy for achieving these. This allows you to set benchmarks or indicators of what good performance looks like and to manage, forecast and track your fi nancial position accordingly. It is important to remember that not every business is the same in this respect as your industry and the stage of your life cycle can infl uence what good performance looks like.
Once you have set the benchmark, disciplined management of your accounts and regular fi nancial reporting will help you to stay informed of trends and opportunities within your business and to act accordingly.
Famed business management guru Peter Drucker is famous for saying ‘what gets measured gets managed’ and the best businesses utilise insightful fi nancial reporting to remain agile and tactile in all business operations.
The fi nal ingredient that I see in most fi nancially fi t businesses is that they have a smarter system of managing their accounts and operations. The fi rst step to this is having a fl exible accounting system that is tailored to the needs of your organisation and saves you time and money in unnecessary manual processing.
The other important step is to avoid doing everything yourself which obviously limits your capacity to grow or improve your business. While you should never outsource your core capabilities, it does not make sense to sacrifi ce your time on admin and accounts work when you can pay someone to do this at a fraction of the value you can create with the time that this will free up.
As we embark on a new year and refl ect on our experience of the turbulent year that has past, what is evident is that those businesses with a clear understanding of what success looks like and a robust reporting system that allows them to respond quickly have outperformed their competitors and will remain best positioned to perform at an elite level all year round.
