156. Mastering Negotiation With Sky Kolade

Welcome, builders, to another episode of Professional Builders Secrets. In this episode, I interview APB's co founder, Sky Colday. Sky dives into a really important skill set for builders, which is expert negotiation. If you've ever struggled with setting boundaries, managing difficult client conversations, or addressing hesitation when trying to close a building contract, there's some absolute gems in this episode for you. Skydives into some really detailed tactics you can use during negotiations and and it's highly valuable, so recommend checking it out. This episode of Professional Builder Secrets is brought to you by Apparatus Contractor Services. Apparatus provides full scope, end to end QuickBooks, Precision Construction accounting and CFO services for residential builders. If you feel like you can't completely trust your weekly and monthly financial reports or you feel like you're flying blind, Apparatus Root will rebuild and operate your QuickBooks accounting system and give you precision construction accounting capability you can trust. Learn more@apparatusteam.com or on the APB Rewards Partner Directory.

In the most important moments, we don't actually rise to the occasion. We fall to our lowest level of preparation.

Welcome to Professional Builders Secrets, the podcast for building company owners wanting to grow safely and securely. I'm your host, Will Blunt, and today I'm joined by Sky Coladay. Sky, welcome to the show.

Hey, Will, how are you?

I'm doing very well. Thank you so much for coming on. Always great to have you on Professional Builder Secrets.

Yeah, I'm excited. Today will be really good.

So in the intro, I mentioned that we're talking about negotiating today. Do you want to talk about why that is such a critical skill for builders?

Yeah, totally. And to go left of field, I'm going to say it's probably more so to do with a bit of a power dynamic. And that might sound pretty funny, but in life, in business and gosh, especially in a building company, signing up clients, trying to sign contracts, dealing with suppliers, subcontractors, everyone else is negotiating. So if we don't focus on our negotiation skills and upskilling ourselves there, the power dynamic's really off because everyone else is negotiating with us and we're not coming to the party, we're not coming to the table with any kind of skill set and we can really get lured down a garden path that we actually don't want to go down. If we turn into a bit of a yes man or a yes woman of like, you know, just accepting whether what everyone else wants, we're not really prioritizing our building company, the needs of the company, the needs of our team, and, and the goals that we're trying to achieve. So I think first and foremost it's, we got to consider the whole power dynamic. Everyone else is already negotiating with us. Let's sit back down and understand, okay, what do we need out of this? Because we should probably be negotiating the back. Not only that, but if you're not negotiating and sort of having any thought, say, or putting an or in, you're not really going to do a great job of setting any kind of realistic expectations if you're just agreeing to what someone else is looking for. And that can lead to a whole suite of problems down the track, not just with clients, but suppliers, subcontractors, like any stakeholder that's involved, even at arm's length with your entire building company.

Yeah, I was about to ask, are you talking primarily about negotiating with clients during the sales process or does it go beyond that and does that change literally everything?

So there's a fantastic book. I'm sure everyone has heard about it by this point in time. It's by a guy called Chris Voss. The book is called Never Split the Difference. And Chris Voss, he's that ex FBI hostage negotiator. And if you've seen any of the ads or him speak before or even, I'm pretty sure it's like the entire subheading of the book, it's, it's everything's a negotiation. So while he would be in very high stakes negotiations, literally like life or death, there's hostages involved. The way he's written this book and even talks about negotiation to literally the general public, it's not just business owners. He talks about this to everyone. It's that everything in life is a negotiation. What are you trying to get out of? Whether it is signing a building contract with prospective clients or is it negotiating? You know, your suppliers are having a price increase. Is it anything to do with your subcontractors. Maybe it's within your team, maybe it's even with your partner at home. Everything is a negotiation. And I think if we can have that mindset, it really takes it out of the sales world and puts it into, you know, what this is sort of like just for the general well being of my entire business.

I could definitely get better at negotiating at home. I think it's funny. Never split the difference. I remember I had a big meeting coming up, this is a few months back now, and was talking about it with Russ. And Russ said, read, never split the difference again if you haven't, and prepare for the meeting using the principles from that book. And I did A deep dive in it over a couple of days before this meeting for preparation. It was so helpful.

Yes, so good. And that's the thing. It's a good negotiator. It's not about win lose. Like it's, it's not the mentality you're not trying to go in to just so that you win, you get what you want. And they don't like the, the ultimate negotiation is a win win. You know it. Especially if you, if you look at Chris Boss and what he was doing and if it was, you know, hostage negotiating, win win would be they get exactly what they want, they got the money and they got to go free. And you got what? All the money recovered and no one was hurt. You know what I mean? So, yeah, it's a bit more nuanced than that. But certainly in business, certainly with clients, when we talk about a win win end to a negotiation, it's where everyone actually leaves the party. Everyone leaves the table thinking they got a great deal and they're really happy. And there's such an art to how you can set up the negotiation to begin with, but then actually like play out that entire negotiation, ensure everyone leaves, you are happy, you are conf. But you also know that they're really happy and confident in the outcome that they got so you can move forward. Because what is the point in doing all of that work for a great negotiation? You got the outcome you wanted, but someone else feels like they got stiffed. Well, you're not going to have a great working relationship for the next one week, one year, one decade. So it really is about finding there's a middle ground somewhere. And the title of the book is Never Split the Difference. It's not about just going straight there, it's about working out what does that perfect middle ground look like so that you get exactly what you need and so do they and you both feel confident to move forward.

We can dive into the tactical side of it a little bit more. But I have a pressing question on my mind, so I'm going to dive in now. Do you go into those negotiations with what you're willing to give up? Is that one of the tactics everyone.

Needs to understand, like what is their boundary? What is their hard line? Because I think if you go into a negotiation without having pre planned and pre thought of, what do you want to have happened? What's your ideal scenario and what is the lowest? Or maybe let's watch our language here. What is the worst case scenario you could walk out here with and still be Happy. If you don't do that kind of prep, you're going to be a mess in the negotiation because you actually don't know where you're going. You don't really know how much you have to play with. I feel like this analogy is so overused because I personally, I feel like I use this now when I talk to anyone always talked about this. In terms of branding, brand guidelines for a company are like a highway guardrail. And it's so you can always, you know, play inside the lines, color inside the lines. And, and that's so true with any like, sales call, prep, negotiation, prep, anything. The prep you do allows you to work out, okay, what are your boundaries, what are your guardrails, where are the lines? And you can color in between those lines. And, and you know, the, the way you color can be different each time. How you talk to someone, it's, it's going to vary depending on their personality, depending on the. What is the context of the situation. But ultimately the outcome you're looking for has been set and you sort of know the highest high, the lowest low that you're willing to go to. So I think there's an expression or there's. Sorry, like a quote that Chris Voss says in Never split the difference. And I'm going to butcher it because I don't actually remember it word for word. But it's. In the most important moments, we don't actually rise to the occasion. We fall to our lowest level of preparation. So it's, it's not necessarily. We're always going to like rise up to achieve this. No, you're going to fall to the best bit of preparation you could get. Like that is as best as you're.

Going to do before diving too much more into the tactics guy. Can you take me back to negotiation in the building industry and how it's evolved over time?

Yeah, and I think, look, whether it's specifically in the building industry, you probably could argue yes, but I think in the greater scheme of things, I think it comes back to that, um, we no longer as a society. And maybe this is a generational thing looking for the win, lose, like you winning doesn't mean someone else has to lose. And also your opponent, for lack of better word, them losing doesn't mean you win. And I think it's the, it's a huge mindset shift that's actually happened. Again, I'm not sure whether it's specifically in this industry or maybe it is just generational because each generation has a different mindset coming into the workforce, coming into business. But I definitely think that's a huge shift that's happened and people are really going out of their way looking for the win win because there's a lot more prior, like it's a lot more of a priority, maybe there's a lot more respect placed on long term relationships and people are really prioritizing their reputation because the expression your reputation precedes you is true. And people talk and especially, especially in an industry like the construction industry, where most of the listeners to this episode right now are actually operating a local business, they're operating in a local area. Your reputation is everything because people talk and you know what? Unhappy, unhappy people shout a lot louder. So it's just, it's too important to not think about it, not focus on it in advance.

That must be even more amplified if you're a regional builder, I imagine, because, you know, how do you overcome a small town talking poorly about your work?

Yeah. And I suppose, you know, it's in those situations, if you are a owner of a building company in a regional like small town, it's probably something you're even more acutely aware of because you've probably grown up in that small town. But yeah, it's, it's something that it's not unnoticed. Like you have to be very conscious of it. So every negotiation, the way you treat every staff member, the way you treat every supplier, contractor and every client will get spoken about. So you got to think, what do you want people to say about you? It's not that, oh yeah, they were a hard nosed businessman, businesswoman who had no empathy and you know, they were successful. But at what cost? I'm not really sure that's what you want people to say about you. It's, you know, what, they're really firm but, but fair, you know, and that to me is the ideal thing. That means like, no, you're not a pushover. No one's walking all over you, you're not caving at everyone's little request. No, you, you were really firm, you knew exactly what needed to happen. But very fair. You, you understood people and you let people feel heard. But then you laid, there was the lay of the land and here's, here's how it was going to work out and here's how things were going to get done.

Yeah, I don't think there's ever been an experience with a pushover, as you could describe it, that has come out with them looking like an authority, a professional service or any of those kind of great Things?

No. And why would they? It's not really a respectful trait. What's that expression? Someone, if you don't stand for something, you'll fall for anything. So you've got to have your line in the sand more often than not. But again, it comes back to that firm, but fair. And then your negotiation skill set and all of the tactics that you can use, actually they're all just a vehicle to get you to where you want to go. But you need to pre plan and work out what are those boundaries, what are you actually looking for? And I think this might even be completely off topic, but I think they're completely linked. I think this is why it's so important as the owner of a building company, like you are running this business for yourself, your family, your team, that you have a responsibility to keep it professional and keep it profitable. So when you go into a negotiation knowing that you're not going to drop your margins, you're not going to drop your price, and you're very confident in why you've priced things a particular way. That doesn't make you unreasonable, it doesn't make you greedy. That means you have a sense of responsibility to operate a professional, profitable company. And the tactics you use in a negotiation, you actually have a lot more confidence to even employ those kinds of tactics to get the outcome you're looking for because you believe in what you're doing on the other side. So I think it, it kind of like ripples into everything. Suddenly it's not just a conversation about negotia. This is really confidence that comes out. And I think potentially that's something else that has changed over the years. There's a lot more professional building companies emerging. And with that, I think there's a lot more confidence in the owners of those companies and being like, you know what? Yeah, I'm here to run a professional organization and here's how I'm going to do it. I'd probably say that's a huge change too.

That's a great point. It's if you have all of your systems in place, if you're confident with your pricing, your sales process, your marketing and messaging, they're almost your pillars for negotiation.

And you're confident in your ratios. When you're confident in your ratios, you don't go into a negotiation. Say it is with a client. This is the easiest example. Say it is with a client to sign a building contract. You're not tripping if they're not signing because you're thinking, you know what I'm Confident in my ratios. I don't need every single one of these prelims to sign into a contract. I'm going to choose my best client. So if I have someone over here who's actually not coming to the party, they're not playing ball, they're not meeting me where I need need them to meet. You have the confidence to go, look, all the best, like good for you, not for me. It's just, you know, you can carry on and go to someone else. Like we're going to be over here dealing with these clients and you have that confidence to let people go, but it's because you've built the business up in so many other ways.

I want to get into detail for a second Sky. We'll come back up to 10,000ft in a moment and go at some more generalist negotiating strategies. But the reason for this podcast in the first place was a builder in our Facebook members group was asking about how they could negotiate with clients that were asking about breaking down a fixed price contract into itemized costs. How would you handle that situation from a negotiation perspective?

Such a good question. And I'm going to preface this whole thing by saying I could very easily be difficult and say, well, if you follow a sales process properly, it really.

Shouldn'T get to me beforehand, but I'm.

Not going to be that person. I will say that if you do have a proper sales process, process, it's not going to be as common because really your proper marketing in place, your proper sales process, I mean, you don't want to get to the point where every time you're about to sign a building contract, you're in a high stakes negotiation. You need to whip out all of these tactics because ideally if you're doing it right, it just the ratio, it's not going to be that high that you have to do this. But I think it's ridiculous. I do, I think it's ridiculous for anyone to come in and say you will never have to negotiate a sale to get someone to sign on the dotted line if you do everything properly. Because everyone's a, well, certainly everyone that you're dealing with design a building contract is a human being. Everyone has agency and they have the ability to change their mind. And we're all human. Emotions creep up, situations change. And because we all have emotions, yeah, people can get a bit nervous and people can delay. So that is part of sales. And this, it's, it's not going to be 50%, it's not even going to be like 30%. Really, it should be like this 5 to 10% that you gotta like really whip out your sales negotiation skills. But this really is how we earn our keep as a proper and professional salesperson or the owner of a building company doing the sales. So it is going to happen. It just shouldn't happen that frequently. But if it is happening, the most important thing you can do is remember, okay, you are a professional. And if someone is hesitating or. Sorry. The example you gave Will was someone's asking for like a full breakdown, right? Yeah. You've presented a fixed price building contract, you're wanting them to sign, move forward, and then it's happy days. We can, you know, get your construction slot booked, so on and so forth. Someone starts hesitating and they want like an itemized list, okay, like what is actually included? Can I see the costs of every item? And start being difficult. That is, that is firstly the commentary we're adding in our head. They're trying to be difficult. I think number one, before doing anything. I love this quote. It's, it's the best thing ever. Stephen Covey said it. It is. Seek first to understand, then to be understood. You will not get anything out of a situation by talking, talking, talking to them and rebuttaling them because you don't understand where it's coming from. And that's the key. You need to understand what it is they are asking for. Because often, especially when it's something like building a home, they don't have the expertise in this. Maybe they think they do because they're an engineer of some sort or whatever and they're trying to be smart and trying to be help. But I think take a step back and say, you know what, Mr. Prospective Client or buyer, hey, Will, what is it you're actually looking for? Like, what are you trying to understand? Help me understand what you're looking for, Help me help you kind of vibe. Because this is where you need to go. Why? Why? Why? Like really get to the root cause of what it is they're asking for. Because often it probably could be rooted in fear. It could be the fact that they don't understand something. Maybe they are comparing their entire process that they've been through with you to their second cousins, uncles, daughter's wife's brother, something. Do you know what I mean? So you're trying to understand where is this question coming from and why are they asking it before you even try and rebuttal it? Because that's just going to be completely futile. Often we end up trying to Solve a problem that they didn't have. So seek first to understand, then to be understood. It's sort of like earning the right. And one thing I really, really want to point out is when someone is talking to you, and this, I think, just goes in life, whether it's with clients, subcontractors, suppliers, even your team, when someone is voicing something to you, a concern, a fear, even their reality, you listening and even saying the words that you understand, you understand what it is they're saying, you understand their perspective. That's good. Saying you understand actually doesn't say, it's not you saying that you agree. And the two things are very separate. And you can even actually say those words. But that disarms a lot of people because certainly in sales, certainly when you're asking someone to hand over hundreds of thousands, if not a few million dollars to build this home with you, a lot of people just want to be heard. And funnily enough, this is the kicker. A lot of people, by the time you ask them questions and get them to voice everything, they're so willing to go straight ahead and sign on the dotted line, and you've not even done anything. You've spoken to them. You've just allowed them to feel heard. How many stories have we heard of that happening? So seek first to understand, then to be understood. Tell them you understand. Understanding is very different to agreeing. And as a side note, if there's any conflict in a team, that's the best thing to do, because people just need to feel heard and understood and listened to. But if we, if we stay on this particular example where they're looking for a cost breakdown, whatever it is they ended up saying, once you've really listened to them, give them their oohs, their ahs, they, yep, I understand. That is when you have permission to actually introduce a solution or solve the problem and definitely have even comparables up your sleeve. Because this is not the first industry, and it's not the only industry that delivers fixed prices right on a service. And you could say something as simple as, you know, I completely understand where you've come from, like, thank you for sharing all of that with me. I totally understand that. It, it seems like a large amount, even though you've gone through the whole process with them, it shouldn't be out of the blue, but totally understand where you're coming from. I can understand that, you know, because of this or that experience or whatever, blah, blah, blah, blah, blah, blah. Let me take the time and just walk you through it right now. And you walk them back through the proposal. You explain everything in a lot more detail. You're kind of looping, you're doing the same thing, but have some stories in your back pocket to compare to. And the easiest one you can do now is you're sitting across from them and say, look. It's kind of like, look at the cars you and I are driving. Will look at our cars. When we went into the whatever garage to go and buy that car, when we got the price of the entire car, we didn't get an itemized quote. Excuse me, an itemized quote for every bolt, every screw, every piece of wire in the car. Because it's just not going to make much sense to us. We leave that to the professionals. But what we did get a breakdown for were any optional extras that we were looking for. But this is the base price of the car, and it's everything to do with the brand, the model of the car, everything that we designed for it. But here are some options that we could add on. And that's exactly what we've done here for these reasons, walk them back through the proposal. So we don't include how much wood is in there and whatever. We do this internally. But that's completely separate, and here's why. And you actually just need to explain it in a way that they can understand. Now, what I will say is this is a very simple way that you can actually explain this, maybe even overcome it for the best clients possible, right? If someone's hesitating, they want a full breakdown, and you can really approach the situation head on with all of those tactics that I just mentioned. However, there are going to be a couple people that it's still not good enough for. And you know what the answer to that is? That's okay. In that case, it means they are not the clients for you. Just because someone says they really want a breakdown and you have taken the time to explain why you don't do that, it doesn't mean you then have to provide it. In no world, in no way do you have to break down how much timber is involved, how much you pay the painters. Do you know what I mean? That's completely separate. And so if someone cannot understand that you've used your reasonable man tone. That's something Jordan Belfort always talks about in sales. If you've gone down that path and they still cannot understand, you've taken the time to try to understand them and they're not coming to the party, that's when the confidence comes in. You don't need them. Like, no, you don't. You know that you can sign up someone else from the prelim agreement, like that's your hard line. And that actually makes you a lot more attractive to prospective clients because you have a standard. So, look, you're not willing to break down all of those details for a magnitude of reasons, but quite simply, like no other industry does, it's. This is what we do as a professional. But if you wanted to add in the pool or the landscaping or whatever those extras were at the bottom of the proposal, that's what we're here to discuss. So hopefully that answered the question. It's. It's a bit of a long journey, but the confidence, if you have that in your back pocket, you're always going to be fine.

Yeah. I think we're leaning into the topic of fixed price contracting versus cost plus as well. But if there's any listeners out there that want to dive into that, episode 79 with Russ, sky and our head coach Andy is the best place to go to go a bit deeper on that and see why we recommend fixed price contracts.

Totally. Yeah.

You mentioned the concept of disarming. Can you explain more about what you mean by that and how it's used in a negotiation?

I would love to. I'm not even sure I know the proper definition. But the most important thing, right, especially if you're in any kind of conflict, or maybe confrontation is a better word. We've always talked about the best thing you can do to deflate a situation is just disarm the other person. And it's essentially doing what they do not expect. So, for example, silly, silly, small example. But say I call you, Will, out of the blue. You actually don't even know who I am, so I'm calling you. It's borderline a cold call, call it prospecting, whatever, and I'm calling you. You answer the phone and I tell you who I am. And that's, you know, when you answered the phone so clearly you were free, but then you found out who I am and suddenly you're not free and you want to get me off the phone as quickly as possible. So you say the words like, oh, look, I can't now, I'm busy. A very average person on the other end of the phone would go, oh, no, that's okay. All right, I'll call you back later. Sorry. All right, bye, bye, bye. Because that guy's just trying to get you off the phone. But what if I were instead would reply to you, Will, by saying, I thought you would be. So blah, blah, blah, you know, actually disarm the other person like I figured you would be, which is why I was calling so to tee up a time to talk this afternoon. Where are you going to go from there? You thought you were getting me. You thought you were so slick getting me off the phone and that. That done deal. But I suddenly disarmed you by saying I figured you would be, so let's talk this afternoon. It stops you in your tracks and it kind of deflates the whole thing and makes you actually pause to think about it. And that's all we're trying to do in any kind of negotiation as well. Make someone pause and listen. Because so easily we can all go into autopilot. So disarm people. Deflate the situation. Let them. I always just picture someone holding up, like, their shield or their tools or something to protect them. And you've said something that kind of lets them like. Like put them down and go, huh? Like, you know, they sort of paused for a little bit and definitely leaning into them when. When they're concerned does that like, let them explain, let them feel heard, and then suddenly they're like, oh, you know, I don't want to fight. Let's be friends and you can just let mosey on down the garden path together.

It is funny. I used to work in cold sales when I first entered the corporate world. And the amount of times people like, I don't have time to speak, and then all of a sudden, 45 minutes later, you've been talking to them. If you can use the right tactics to get them going.

Exactly. Defense mechanism. Like, we all do it. Especially, like, I literally did it today. It's like an unknown number. And you're like, oh, it could be what I think it's about. I'm gonna roll the dice and answer the phone. And you do. And it was like that real estate agent or something, you're like, oh, God, I gotta get off the phone. But you know, there's a way, like, they can disarm you. It's like something off market you didn't know or do you know what I mean? And it's like, oh, actually, yes, I do have time. Let's chat.

This is gold. That's a great tactic for a builder to take into a negotiation. That disarming concept. What are some other tactile things that they can do during a negotiation process? What are they trying to do literally with the person they're talking to?

So one of the best things that you can do sounds so funny is actually speak less. And when you're in a negotiation, you want to be the cool, calm, collected, sitting back, listening. And if you can put that into one word, I'm actually just going to say silence. The less you speak, it's actually an invitation for the other party involved to speak more. And the more the other party speaks, the more intel you get and you can actually really discover just by not saying as much and remaining silent. And to be honest, it's just allowing the other person to speak. People always often feel the need to, to fill silence. So if you offer the silence, the other person can fill it and you can really gather a lot of data, a lot of intelligence to work out. You know what this is, what they're prioritizing, this is what they're concerned about. It's yes, speaking less and having silence there, but really listen to what it is they're saying. And a lot of the time you got to listen. It's like read between the lines, what are they not saying by saying these other things, you know, and then ask those questions, really clarify. A lot of people feel quite interrogate, especially in a negotiation when you ask very direct questions and certainly a lot of follow up questions. You can see it in some personality types, they sort of recoil, they feel quite uncomfortable because they feel like they're getting interrogated. So if you ever notice that happening, the best thing you can do is stop asking a lot of direct questions by that point and introduce something called mirroring. And again, Chris does talk a lot about this in the book. Never split the difference, but it's such a simple tactic that if you were to ask a question of okay, help me understand. When you say you're looking for everything itemized, how much detail are you looking for? And they reply back with something like, oh, I at least just want to know all of the materials that are involved and how much everything costs just so I can get an understanding. All you reply back is get an understanding because you've actually not even used up one of your question cards there. You've just repeated their words back to them. You've added a cute little inflection at the end. So it sounds like a question, but you're not really using one of the question cards you've got. And it's sort of like a, okay, that's interesting, tell me more, what do you mean about that? Keep going. And it's a very, I'm going to say it, disarming way of getting someone to open up and talk more and more and More. And it's, it works insanely well. Just try it on your partner, try it on your kids, try it on your team because you can get someone to literally have a full blown conversation with you and all you have done is repeat back the last. It's always like the last three words, three to four words that the last person said and it's just insane. I'm sure you've been doing this if you were prepping for that meeting. Will.

Yeah, actually I just thought of a question and it's a bit of a curveball because we didn't plan for it at all. But it's a super important one. How do you systemize negotiating for your team?

That's a great question. And it's almost, I suppose it comes in many different forms because certainly something that we have internally here is supplier renewals. Any software renewal, especially if you're in a big building company, you got a lot of software licenses for your CRM or whatever if your renewal is up. This is just a checklist. Everyone has negotiated. They're not going to pay that same renewal price. Like we're into our third year or fourth year. All right, so it's actually like what can you do? Like that's part of a checklist. Like you don't just go in like, yep, happy to renew. Thanks to our account manager. Ha. It's actually go in. Look, we've, we've had this many users on this account for this long. People want to keep your business. It's very competitive space now in any kind of software. So go in with a negotiation. That's an easy way of having it systemized. There's. If you look sales wise, this just becomes part of your call preparation. Think of every single sales call as a negotiation and you're set. If you properly prepare. You know your the ideal outcome you're looking for every single call. It's a constant negotiation just to make sure you get to that end goal you're looking for. And they feel heard that's their win, you know, and especially if it results in a sale, you're solving their problem. But you get what you want. It's a win win. So I think that's a, it is a simplified way of looking at it. But I think that's the only way you can look at it. Otherwise it just becomes too overwhelming.

Would you document some of those tactics in a sales manual like mirroring or silence, Open ended questions?

Absolutely, absolutely. This should be the fund in the fundamentals section of any sales manual. Certainly in the way we have it laid out at our company. But even as part of. If you're a member of apb, one of our action plans is creating a company manual. One of the downloads in that action plan is creating a sales manual. Because it does need to be separate. It's so important we actually provide a template so you can at least get going. And this is. You'll be able to see it in that template. It's not just where all your scripts go. Okay, what are some fundamentals? Like what's mirroring, you know, what is labeling? That's another tactic that you can use. What is this? What is that? What is silence? Like, here are all these things you should do and what they are and why you should implement them.

Should we talk about labeling then?

Yeah, let's. A little open loop, doesn't it? So labeling is another fantastic technique. Again, it's come from Chris Vossen. And did he invent all these things? Absolutely not. But it is probably the biggest book that I'd say everyone has read, so you can very easily reference it. It. But labeling is such a powerful strategy. And it's. What you're doing essentially is putting a label on their emotions or behaviors, to be honest, on what the other person is doing. And it allows you to almost seek clarity and show that you are understanding them. And I'll give you an example in a second. But another thing that you can do is, is on purpose mislabel something so that the other party can jump to the, oh, no, no, no, here's what I mean, jump to clarify something. And you got the intel that you needed anyway. So a great example is in this situation that you brought up, Will, if, if you have a client that you've done all this work, you've presented the, the, the fixed price building contract, they just need to sign it. You've walked through the whole proposal and now they're asking for a fully itemized, like, breakdown of everything that's included. And you've gone in with the idea of, okay, seek first to understand, then to be understood. You're asking questions like, help me understand, like, what are you looking for? What do you mean? What do you need to see? Help me understand why you need to see it. How does that influence this? Blah, blah, blah. You're asking all these questions. Say some emotions start coming out. I just, you know, the other person starts. Or your client, prospective client starts saying, oh, it just, it just makes me really nervous to think I don't know what's included. And I, I like be on top of Things. I want to know all of the details. It's just my personality. You could respond back. Not with another question. Not mirroring, not silence. You could use labeling as a tactic and you can say sounds or sounds like. Sounds like it's weighing on your mind. Sounds like or sounds frustrating sounds. Nerve wracking sounds. This label an emotion that you think that you can based on your EQ that you're getting out of the other person so that they can go, yeah, it is. I am really nervous because of this. And again, it like invites them to open up on why they feel that particular emotion. Because again, we're all humans, people have emotion. If we were all logical, it can make sales all day long. But you know, people have emotions. So now we need to be a sales professional and deal with the emotion because people buy an emotion justified with logic. So we need to get the sale across the line by addressing all of their emotions at the same time. You could purposefully mislabel the other person so they can clarify. And it's like, sounds like the overall cost isn't important to you. No, no, no. It very much is because of this, that and that. Be very careful with it though. You need to be quite tactful. If you purposefully mislabel someone or do an incorrect label, you don't want it to come across that you're not paying attention or you're not listening. You need to do it in a particular way so they can jump to the defense or sounds like it's not really important for this person. Maybe it's more important for you and then they can clarify. No, no, it's important for both of us because this happened in the past. We had this situation. Do you know what I mean? Do the examples make sense or have I sort of confused?

No, definitely makes sense. I think one thing that came out of that was how important EQ is as well. Having actively listening and showing genuine empathy for what you're listening to so you can respond in that way.

Yes, actually this is a really good point because I think the longer you're in this game, and this again could be true of any industry, but certainly in residential construction, if you've been doing the sales for any number of years, and if you've been in this industry for years, if not decades, like certainly a lot of our members have been, it is very easy to get a bit disillusioned and maybe a bit cynical and you can almost get a bit angry with clients and potential clients. And it's like, why don't they Just understand that, like we're trying to make money and we're trying to be a professional builder. Like, you know, they're just being so difficult, they don't understand. And that isn't leading with any kind of empathy. People have concerns and we need to understand that and it is our job to bring them through the other side. And, and unfortunately, if, if you've run out of that empathy, if you're too cynical, you're not going to go very far in sales because you can't, to be honest, even utilize a lot of these techniques because it's just going to be too hard for you. So really separate it. Put your emotions and thoughts and preconceived ideas to the side and try to understand the person in front of you because you'll be surprised as soon as your cynical thoughts are to the side. Like you could, you know, everyone does it. Everyone makes a judgment on this lead that comes through. Are they going to be a waste of time or are they going to be good? Put those judgments aside, run them through qualifying, make it non emotional and you could surprise yourself. But like you say, will, it's the eq. Can you really read someone's emotions? Can you understand? Do you have the empathy? Can you actually converse properly with each other or are you set in stone and you're trying to make someone always walk up to you? No, you need to walk to each other.

The other piece I'm hearing you say is the mindset's important with negotiating, having, if you're cynical compared to having a positive and open mind about every possible lead, it's totally different.

Yeah, I mean, how many times have you and anyone listening been in a negotiation, quote unquote, with someone, I'm going to say it, potentially a lot older than you. And if they have that cynical mindset or they have the mindset of win, lose, like I have to win and you have to lose, they're just not a pleasure or a pleasant person to do business with to. It might even not even be even a business situation. You wouldn't even remain friends with someone like that because that's not a harmonious relationship. So mindset is huge. It's win, win. It's trying to understand the other person and then letting them understand you, having your boundaries in place, being a professional. But it's all these things that equate to a professional negotiator. It's not just someone who has all the gear, can use all the tactics just to get the outcomes they're looking for because your Reputation precedes you. You're going to get found out after a while.

And it's like any new skill or any skill you're trying to develop, you need to work on it. Right. You can't just expect to be an expert negotiator tomorrow if you've not ever learned or done anything about it before.

Totally. Totally. Totally. Most people suck, let's be honest. Most people are terrible at negotiating because there's such a spectrum. And you either go too far one way where you're too hard and that you've diminished a lot of empathy for the other person because you're just focused on what you're looking for, or you go to the complete opposite end of the spectrum and you're too soft because you just want to make sure they're okay. And then you're willing to put all of your needs on the back burner. There is art and science to negotiating, and it really is somewhere in the middle, but it does ebb and flow based on the stakes, the situation and the context that you're in. And expert negotiators know that. And so your preparation is key for every scenario that you walk into. Hmm.

One thing's for sure, it's a hugely valuable skill for builders.

Totally. Absolutely. I just don't think you can even operate your companies without it, because you just. You're not going to be getting the best out of your team, your clients, your suppliers, your contractors. But also, negotiation is so important, even just to protect the entire future of your building company. Like, this is, at the end of the day, your profitability, this is your margins. And certainly as the owner of the company, it's important. But every single one of your team members need to be armed with these negotiation tactics as well. And I mean every single team member, because they're all dealing with other, like, outside stakeholders. It's not just your sales team members who are closing the deals with those clients. Who. Who manages the relationship with your clients after they've signed the contract? Think about, who is that in your team? Do you have a client representative, like in the office, who's their point of contact, or is it one of your project managers? Whoever it is, they all need to be aware of how to negotiate with clients, because the negotiation doesn't stop when a contract gets signed. There's variations, like, what are you going to do? Not charge your variation fee, not add the proper markup, so you're making your margins? Of course not. So everyone needs to be trained on how to negotiate and be a very great Communicator. And I think the two go hand in hand because everyone's involved with different stakeholders. Anyone in your office, they need to negotiate with different suppliers. Your estimator needs to be a great negotiator. They need to get the best rates possible. You can see how it just, it's so much more than sales and ripples everywhere.

Yeah, that's a great point. Every touch point could be a negotiation. So there's tons of good advice in this guy and I feel like every thing you say, I could have a hundred more questions, but we're almost running out of time, so. So if you were to put a bow on it, what's some final advice you'd give for builders about being better negotiators?

I think I, I think if we focus in on mindset, which it's been brought up a lot through our conversation today, but maybe even just change your mindset. Even if there was a little, you know, negotiation is hard, negotiation is unfair. Maybe you've got preconceived ideas about it or maybe even just that negotiations reserved for, or something high stakes, something to do with a contract. Let's just completely transform that. Let's change our mindset on negotiation as a whole. You can make almost anything a negotiation. So just start practicing. Literally, try and think in your mind, I'm going to negotiate absolutely everything today or for the rest of the day or for the rest of the week or whatever. And you will realize just how pretty much every conversation is an interaction and it is an exchange of value and that's a negotiation. So what do you want in exchange for this? I think if we can change the mindset, you can go really, really, really far. And just remember that in most negotiations, especially when it does get to the end, it really ultimately always ends in if I do this for you, are you going to do this for me? So you've got to work out in your prep, what do each of those scenarios look like? And then, you know, you're on that win win path.

Brings us back to negotiating at home. I think it wraps it up.

Practice at home with your kids, with your partner. Get into it.

Yeah, cool. Well, sky, you mentioned the creating a company manual action plan. Is that the best place for people to go next or what else would you recommend?

Look, if you are a member of apb, dive into your member portal because we've got an entire action plan on successful negotiating. And this was the quickest conversation you and I could have, but there's an entire training video on mirroring on silence, on labeling, on all of these tactics that we just went through, there was something I didn't even mention and it's talking about what questions, not how questions. So there's an entire training that we put together for members of APB and I would definitely recommend going through that because you can sit down and just fully immerse yourself in negotiation. All these different tactics. There are downloads galore available.

Perfect. Well, I'll put a link to that in the show notes. But sky, thanks so much for coming on the show today.

Perfect. Thanks so much for having me.

Will Always a pleasure and a big thank you to our listeners as well, wherever you are in the world. If you like the show today, please subscribe to Professional Builder Secrets on your platform of choice and are you feeling generous? Leave us a review, but until next time, have a great day. This episode of Professional Builder Secrets is brought to you by Apparatus Contractor Services. Apparatus provides full scope end to end QuickBooks, Precision Construction accounting and CFO services for residential builders. If you feel like you can't completely trust your weekly and monthly financial reports or you feel like you're flying blind, Apparatus Route will rebuild and operate your QuickBooks accounting system and give you precision construction accounting capability you can trust. Learn more@apparatusteam.com or on the APB Rewards Partner Directory.