Monday, April 25, 2011

The Art of Deal Making

By Robert Ringer
If you look at the great entrepreneurs of our era - Kirk Kerkorian, Donald Trump, and Rupert Murdoch, to name but a few - the one thing they all have in common is that they are great dealmakers. All of them hire others to handle their day-to-day operations, while they work on identifying and closing lucrative deals.
And so it is with many individuals in a wide variety of occupations, people who have used their dealmaking prowess to build empires. Wolfgang Puck is undoubtedly a great chef, but probably no better than thousands of other great chefs. From what I know of his rise to the top, it is clearly because he is a dealmaker supreme, who found a way - make that many ways - to transform himself from a gourmet chef into a culinary empire.
Ditto Howard Schultz, the man who built Starbucks into a global phenomenon. Start a chain of coffee shops? Are you kidding me? What a terrible idea. Nevertheless, in the face of declining coffee sales in the U.S., Schultz had the audacity to charge $3 for a cup of the world's dullest and most common drink - and served it in a paper cup, to boot!
And this came about at a time when the world appeared to be moving too fast for people to slow down, relax, and enjoy a cup of coffee, as they did in the good old days. Now, with $30 billion in sales, Schultz leaves the day-to-day management to others, while he focuses on making deals to further expand Starbucks' worldwide reach.
I could go on and on ... with Steve Riggio, who built Barnes & Noble into a retail giant and, in the process, transformed the way bookstores do business ... with Martha Stewart, who built an empire by teaching women how to excel at being good housewives ... with George Lucas, who created a one-man industry based on a single story. The list of dealmaking, empire-building entrepreneurs is endless.
The Dealmaking Adventures of A Super-Nerd
But even these giants pale in comparison to Bill Gates. Many people think of Gates as a computer geek who made good because of his awesome techno-skills. But Gates is much more than a computer maven. The real roots of his success lie in his incredible dealmaking skills.
As pretty much everyone knows by now, Bill Gates did not invent the DOS operating system that launched Microsoft into the stratosphere. What he did do, however, was make the deal of the century when he negotiated the purchase of DOS (referred to at that time as "86-DOS") - for a mere $50,000!
Funny how life works. I'll bet you don't even know the name of the guy who actually wrote the DOS program (for a now-defunct company called Seattle Computer Products). It was a twenty-two-year-old programmer by the name of Tim Paterson, and he accomplished the feat in - get this - four months.
Paterson got paid pocket change for his efforts, while Gates parlayed the acquisition of Paterson's creation into becoming the richest human being on the planet. I guess I could say that life isn't fair - but if you're over twenty-one years of age, you already know that.
Of course, Gates was just getting started. He then turned right around and set up a meeting with top execs at IBM. At that now-historic gathering, the IBM corporate types wore pin-striped business suits, while Gates showed up in a stained T-shirt. According to one observer who was at the meeting, he looked like a seventeen-year-old kid negotiating with grown men.
But underneath that nerdy-kid persona was a master dealmaker. Gates managed to negotiate the second deal of the century when he got the guys in the pin-striped suits to agree to install DOS in all of IBM's PCs.
And he still wasn't through. Perhaps an even more masterful dealmaking accomplishment was that Gates reserved the right for Microsoft to sell DOS to other companies. That one dealmaking coup (which, in dealmaking parlance, I like to refer to as a "throwaway bonus") laid the foundation for Microsoft's worldwide domination of the software business ... and, to use a fitting cliché, the rest is history.
The World's Highest-Paying Profession
When I was a young real estate broker, a wealthy builder ("Al") once said to me, "Though it goes against conventional wisdom, I can tell you with certainty that having the best product or service in your industry doesn't guarantee success. The twin keys to making money are dealmaking and marketing. And I would argue that dealmaking is what makes marketing possible.”
Robert Ringer has helped more people transform their aspirations and goals into reality than perhaps any other author in history.
For more than two decades, his works have stood alone as the gospel when it comes to conveying worldly wisdom that translates into tangible results.
Ringer is the author of three #1 bestsellers, two of which have been listed by The New York Times among the 15 best-selling motivational books of all time. All of his books combined have been read by more than 10 million people worldwide.
Robert Ringer has appeared on numerous national talk shows, including The Tonight Show, Today, Good Morning America, The Montel Williams Show, ABC News Nightline, and The Charlie Rose Show.
In addition, he has been the subject of feature articles in such major publications asTime, People, The Wall Street Journal, Fortune, Barron's, andThe New York Times.
I was fascinated by Al’s comments, and anxiously began to pursue the subject with him. When I asked him which businesses best lent themselves to dealmaking, his answer not only surprised me, it had a major and permanent impact on my approach to business.
He said, "The nature of the business is irrelevant. I like to think of dealmaking as a profession unto itself - the world's highest-paying profession. Things don't just fall into place by accident. A good dealmaker understands that it's his job to finesse things into place. And that's true in any kind of business."
His words were nothing short of life-changing. They've been indelibly stamped on my forebrain for three decades, and have paid huge dividends for me ... in the real estate business ... in the cellular-telephone business ... in the newsletter business ... and in scores of other businesses and side deals that I've been involved in over the years.
Clearly, good marketing is crucial to business success, but adept dealmaking must precede marketing. Why? Because if you don't make the deal, there's nothing to market! Bill Gates is the poster nerd for this. He's proven to be a great businessman and marketer, but he never would have been in a position to market DOS had he not first negotiated it away from Seattle Computer Products.
It's easy to see this same principle at work in every kind of business one can think of. For example, anyone who's had any experience in buying and selling real estate knows that the money is made at the time a property is purchased. Meaning that if you buy a property at the right price, your profit is locked in before you even try to sell it. Your marketing ability then determines how long it will take for you to cash out.
It's a Fact:
Great Dealmaking Skills
Lead to Seven-Figure Incomes
Al's insights into dealmaking proved to be the spark that catapulted me to seven-figure income as a real estate broker while still in my twenties. I worked exclusively on large apartment developments, and was very good at marketing them. But the real reason for my success was my ability to locate makeable deals, get the owners to sign my listing agreements, and, finally, close the deal once I had a serious buyer lined up.
Years later, Al's dealmaking insights were also responsible for my becoming a bestselling author. Now, you might be wondering, "But wasn't the quality of your writing important?" Of course it was. Quality is important in any business.
In fact, the most gratifying aspect of being a writer is receiving letters and e-mails from readers who tell you how much your work has impacted their lives. It's a high that's almost impossible to explain. Hearing from readers tells you whether or not you are delivering value to your audience.
Nevertheless, had I not become a master dealmaker early in my business career, I never would have been in a position to share my writing with millions of readers around the world. Everything that has happened to me in what may appear to be a charmed life is a direct result of my dealmaking and marketing efforts.
Baptism by Fire
On more than one occasion, I've been asked if I view dealmaking as an art or a science. Interesting question. In all honesty, I would say that some of the basics are scientific, but, on the whole, dealmaking is an art form. And the only way to excel at an art is to learn the best techniques possible, then practice those techniques over ... and over ... and over again.
Problem: Unlike dancing, painting, or playing a musical instrument, you can't practice dealmaking at home. The only way to become a profit-producing dealmaker is to jump in and "do deals." There's no spring training, no preseason, no practice sessions. You can do a certain amount of preparation for each deal - which you should - but you cannot practice the art of dealmaking itself. When it comes to dealmaking, it's strictly baptism by fire.
And that means being willing to jump in and get your feet wet ... which, in turn, translates into rejection ... embarrassment ... and, yes, even failure. The willingness to fail is important, because no matter how good you become at the nuances of dealmaking, your bottom-line results are tied to the law of averages. Which is to say that the more you work at dealmaking, the better you get at it and the more deals you close.
In other words, there is no shortcut to dealmaking success. No sitting at the kitchen table in your underwear, pecking away on a laptop and watching the money roll in. (The only thing that should roll when you read ads filled with that kind of rubbish is your eyes.) Professional dealmaking is a genuine skill and should be approached in a serious manner.
The Money Is in the Details
In many of my books, I relate stories about various deals that I've made through the years, but I rarely have the luxury of going into those deals in great detail. The reason for this is that long stories and an excess of details don't work well in a book, because people are impatient.
I'm the same way when I read. I like authors who cut to the chase. I don't have the patience to read a lot of detail. Which is unfortunate, because when it comes to dealmaking, the devil is in the details. More to the point, the money is in the details. 
In other words, superficial knowledge doesn't work when it comes to dealmaking. In fact, as many entrepreneurs have discovered to their chagrin, a little bit of knowledge can actually be dangerous. Which is why it's absolutely essential to possess an in-depth knowledge of the intricate details of dealmaking.

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