Every billboard deal begins and ends with a successful negotiation of terms. But many people don’t understand the mechanics of these transactions and the science behind them. In this Billboard Mastery podcast we’re going to explore the art form known as American contract negotiation.
Episode 128: The Laws Of Negotiation Transcript
Nobody in the history of the billboard industry has ever obtained a ground lease to build a billboard, obtained a contract to buy a billboard without negotiation. And how you approach negotiation, how you understand the science behind it, is imperative if you want to succeed. This is Frank Rolfe with the Billboard Mastery Podcast. We're going to talk about the science of negotiation because it's a skill that more Americans need, yet few of us truly understand and have a mastery of. Now, what is negotiation? That's basically just the back and forth between the two parties, whether it's the ground owner as the lessor and you as the lessee, or the contract to buy a billboard, if you as the buyer and somebody else as the seller. And here's how negotiation works. You start off with an offer, typically coming from the buyer. The seller will say, no, no, you. You give me the offer. It has to be just high enough to be countered, but as low as you can start from. Kind of a philosophical problem there. So you want to make an offer that's as low as you can humanly go, but yet high enough that the other party will counter it.
If they won't counter it, then you're done right there. There will be no negotiation. The deal will never happen. So if you say, well, I don't want to pay more than $500 a month in ground rent on that billboard, $6,000 a year, and you say, well, I'll lowball the guy. I'll just offer him $3,000. If he doesn't take and counter your 3,000, if he thinks you're not a serious person, if he instead goes to a competitor, then you gain nothing. So you've got to set your initial offer high enough to be taken seriously and to be countered. And then if you can pull that off, if you can get it in there enough that they believe in you enough to respond, no matter what they respond with, you have to flinch. Now, what's flinch mean? That's kind of sounds goofy. That means that you give a verbal and a visual response like it caused you pain. If other party says, well, I want, I want 10,000 year, you go, oh, man, that's way too high. There's no way I can do that. Letting the other party know that they've pushed their boundary. You went low enough yet high enough to be taken seriously, but you have to let them know on their response is simply too high.
And then on your next offer, you come up, up some and they come down some and basically triangulate to an ending. But that's all negotiation about it's like playing tennis. You hit the ball, but it has to be within the boundaries of the court enough that they'll hit it back. And then when they hit it back to you, you have to flinch, you have to act pained, you have to scream, ouch. And then hit it again a little closer to the target of what they're willing to agree to, each time, making sure you don't offend them, that you went up enough to be taken seriously, but yet as little as you can. That's kind of the Zen approach to negotiation. Now, how can that go wrong? I mean, it sounds simple enough. Obviously, the first problem is you have to know what your limits are, because you can't negotiate. You can't tell someone how much you'll pay is ground rent on that lease unless you know what the market will bear, as long as you know what other people are paying. So you've got to do a little research. You've got to do a little empirical fact finding before you can enter into the negotiations.
So you know where to throw out that first price. You can't just guess at it. If you guess at it well, then it probably isn't going to be taken seriously because you probably missed your market. Or more importantly, if you don't know where you're going, you may end up way too high, and then you'll have to basically retract completely from the deal because suddenly it's not attractive to you, even though you worked on it so hard. What else can go wrong? If you don't do the flinch, it sends a terrible message to the other party that they're nowhere near your boundary. That's the problem. If someone threw out a crazy low deal to you, if you got the seller to throw out the number and you think it's worth $500 a month on ground rent and he throws out $50, the worst thing you could do is say, oh, okay, I'll take it. That lets them know they did a lousy job of negotiation, so they immediately don't want to do the deal anymore. You have to do the flinch. In that case, when they say $50 a month, you say, oh, man, that's a lot.
I don't know if I can do that and cover all my costs and still make a profit, but maybe I could do, you know, 40 a month. Many deals have been lost over the decades from people who were so excited by what that lessor said or that seller said that they just jumped right on it, only to find out then the contract never comes because the other party knows they screwed up, they want to reset, they want to do over, and that means you're out the door. You can't let that happen. That is not good business sense for you. Now, if you're not used to negotiation. You probably need to get in the zone. You need to get some skills added. So where can you go and develop regular real life skills of making offers. And flinching and making a counter offer? Here are some ideas for you.
Number one, go to a garage sale. Those things are notorious for price flexibility. Look at something in the garage that you want. I don't care what it is, because. Stuff is so cheap. Let's say they got something in there. It's an old board game, it's $10. Go to them and say, hey, I'm kind of sued in the board game, but it's in really poor condition. And there's a lot of these out there. I see them on ebay. You have it priced at 10, but I'm thinking more like 4. And then see what they say. And they'll probably say, oh, well, I don't know if I can go four. I can maybe do like seven. And you have to go, oh man, seven. I don't know. I don't really know if I want it that bad. Like how about, how about five? And they'll probably come up, down to six and then you get to 550. And what's important isn't that you bought the board game. What's important is you started to master the skill of negotiation. You can do the same thing at an estate sale. Farmers markets are great on that type of deal. Price on the tomatoes. Five tomatoes for $2. Say, man, I don't know. There's some other guys in here with five tomatoes for $1. Would you take a dollar? And they'll probably say, well, you know, I can't.
I don't know if I can do a dollar. I can do like a $75. And you go, oh man, that seems like a lot based on the other ones I saw in here. Like, how about a dollar and a quarter? You're probably going to put a $50. Again, what's not important that you eat the tomatoes. What's important is you're getting a very low cost college in negotiating skills. Because the problem with all of us is we don't use enough negotiation in America. In other countries, everything's negotiable. People even go out to dinner. And it's negotiable in places like Italy, but in America, we seem to, like, have these rules, these bartering prices set in stone on a menu or on a product. And we never argue it. We never use any negotiation to try and solve that. That needs to end immediate with you. You need to get more fluid on negotiation. And it doesn't hurt to watch the shows Pawn Stars and American Pickers. These shows are great because all they are is a show about negotiation. It's about, of course, historical items and the history behind them. And that's all interesting. But if you really watch the show, those shows are like a junior college class in negotiation.
All you see in any given show, 10 or 20 negotiations, you'll see the same skills of throwing out an offer as low as you can go, but yet is serious enough to be countered. And then you'll see the flinch and then you'll see the triangulation. The bottom line is if you want to be better in the billboard business, you got to get better at negotiation. It's a skill, but it's a skill that anyone can learn if you put in the effort and you really think about it. This is Frank Rolfe with the Billboard Mastery podcast. Hope you enjoyed this. Talk to you again soon.