Sometimes when you sit down to negotiate, you know the other person holds the advantage. CPAs could face this situation when selling a firm or other business, trying to get better compensation, working to bring in new clients, or other scenarios. While it can be stressful to be in a challenging spot, you can often turn the tables and come through in a strong position by following these steps.
Do your homework. "It's a huge disadvantage if you're not prepared," said salary negotiation coach and author Kate Dixon, of Portland, Ore. In salary discussions, preparation can include researching compensation levels for the position in your location. Practitioners can find insights on regional salary ranges from resources such as the PCPS Management of an Accounting Practice survey.
In a firm sale, get a sense of what firms like yours are selling for in your local market, but keep in mind that a number of factors affect each sale, including cash paid upfront and length of payment period for subsequent payments, client retention, firm profitability, and other considerations.
Brannon Poe, CPA, founder of Poe Group Advisors in Charleston, S.C., recommends building a strong position years before a sale by taking steps to make the practice more marketable, such as building a profitable firm with solid key performance indicators. If you are ready to sell but are concerned the firm may not be in a good position to attract buyers, last-minute cosmetic upgrades can help, such as freshening up the office with a new paint job, along with cleaning up your files or processes to make things more efficient or bringing outstanding receivables up to date. "You're not going to turn the ship around in a week, but there are things you can do," he said.
When negotiating to land a new client, determine which selling points are most important ahead of time. That means emphasizing the services and pricing to be provided, the value your firm will hold for your client, and the industry expertise your firm has beyond what competitors can offer.
Understand your goals. "Whoever goes in knowing exactly what they want is at an advantage," said Poe, whose company handles accounting firm transitions. In a CPA firm transaction, factors to consider in addition to financial terms might include whether the sale or merger is a good fit for clients and staff or the time necessary to complete the transaction. If you understand your objectives, "you'll be more at ease and clearer about when to say no," he said.
Pinpointing your goals can be helpful in other professional negotiations as well, from firm mergers to bringing new clients onto your roster.
When approaching salary negotiations, think about the different aspects of the job and how they rank in importance to you. It also means determining your overall goals. Is salary the most important consideration, or would you be willing to change your salary expectations based on other factors that may be important to you, such as benefits, paid time off, a flexible schedule, or company culture?
Ask questions. You can learn how to strengthen your own position by determining what is important to the other party and what they're trying to achieve, according to Jeff Cochran, partner of Shapiro Negotiations Institute in Baltimore. As they explain their needs, ask the other person why each one is important and what else matters to them. If they name a figure, for example, find out how they came to it. You may find that some of their assumptions are wrong or that you need to offer more information to strengthen your position.
You'll also get a sense of their thinking, so that you can use their answers to determine ways to present what you have to offer in a way that's meaningful to them. In most negotiations, you don't know what the other person will offer or ask in advance. Asking insightful questions shifts the pressure to the other person and gives you time to plan next steps.
Don't underestimate your own clout. Negotiations make people nervous. As a result, they often tend to focus on all that could go wrong and overestimate their own weakness, Cochran said. That may seem like a smart way to prepare for the other side's arguments or rationale, but it can damage your confidence. Be informed about the other side, but also spend time reviewing all that you bring to the table.
In salary negotiations, for example, one big advantage is that you know the company wants to hire you or keep you on staff if you've come to the point where you're negotiating salary, Dixon said. Use that knowledge to maintain your confidence in seeking the pay you want. Before the meeting, you can minimize anxiety and fine-tune your points by practicing talking out loud about what you are going to ask for, including any research that supports your position, she said.
Be comfortable with silence. "It's very common to want to fill every void," Cochran said. By jumping in and speaking too soon, "people make a lot of mistakes." They may share too much information, for example, or cut the other person off when they might have softened their terms. Given some time to speak, the other person may also offer more insights into their reasoning and goals.
Take time to regroup. What if you don't realize you're at a disadvantage until you're already in the negotiation? "You can always say you need a break or a breath of fresh air," Cochran advised. Find a quiet place and sketch out points that will help you negotiate with more assurance. When negotiating for a new job, if a short break isn't enough and you want to step away for now, confirm that you're still excited about the opportunity, but you need more time to think about it before you can develop more questions, Dixon recommended.
Don't take the process personally. A negotiation is a business problem that needs a solution, Dixon said, not a measure of your value as a professional or as a negotiator. "The more collaborative that you and the organization can be, the more likely you are to reach a good solution," she said. If the negotiation doesn't work out, understand that the situation was not the right match.
— Anita Dennis is a New Jersey-based freelance writer. To comment on this article or to suggest an idea for another article, contact Chris Baysden, a JofA associate director, at Chris.Baysden@aicpa-cima.com.