CASE STUDY: How Negotiation Skills Contribute to Success in The Business World With Charlynda Scales

Hello, my friends, and welcome to another exciting episode of Negotiate Anything. This show is produced by the American Negotiation Institute and with over 5 million downloads and listeners in over 180 countries, listeners just like you have made this the number one negotiation podcast in the world. Hi, my name is Kwame Christian and I am the founder and CEO of the American Negotiation Institute here at A&I we believe that the best things in life are on the other side of difficult conversations. And we are passionate about providing you with the best content that will help you to make your difficult conversations easier, both at work and at home. Lastly, I want to remind you that we offer consulting and conduct trainings both virtually and in person all around the world. Our focus is in three main areas. First, negotiation and conflict resolution. Second, leadership. And lastly, diversity, equity and inclusion. Check the link in the description below to learn more about how we could work with you and your team. And now, without further ado, let's jump into the interview. Charlinda, thanks for joining us today.

Hey Kwame, thanks for having me.

Yeah, it is our pleasure. So how about you get us started by telling us a little bit about yourself and what you do?

Sure. So my name is Charlinda Scales. I'm the founder of Mutt Sauce. We make the sauce for every meal. I'm also a military veteran and reservist in the United States Air Force.

Well, thank you for your service and your delicious contribution to the economy. We appreciate both listeners in this episode. This is going to be a fun one, a little bit different from what we usually do. We're going to use Charlinda's business, her company Mutt Sauce, as a case study for just how many different ways negotiation and difficult conversations, conflict resolution, however you want to phrase it, comes into play when it comes to your success in the business world. We're going to focus on the conversations and negotiations she had in three main domains. First, manufacturing. Second, her business deals, and then third, conversations with employees and people on her team. So manufacturing, when you're talking about the manufacturing process of your company, let's just give people a general overview and then we can get into the specific negotiations.

Absolutely. So much sauce in itself is an all purpose sauce. In the grocery world it's considered a specialty sauce and we sell it in different platforms. We sell it in retail and we sell like retail stores and we also sell it online. So the product itself is co packaged, contract packaging is the manufacturing process. We will find a big manufacturer and we will do a contract with them to make the product and we have A line of five products. Sometimes we do a limited edition product, but basically they will manufacture everything. They deliver it to us in cases that contain 12 bottles per case and they'll deliver it on big pallets. So maybe 150 to 170 cases per pallet. That's the process. And then we just distribute it from a warehouse to. To all of our clients.

That's great. Very interesting when you think about the negotiations that you've had throughout your experience in manufacturing. And I'm sure there's so many that it's almost hard to pick from. What are some of the biggest ones that come to mind?

Well, for my product and the history of it is I actually got this recipe from my grandfather. Everything that people see with Mutt sauce originated from a single sheet of paper. The original recip and I did the entire line is just a variation of that one recipe. But with that, you know, it's the secret sauce, like really is the secret sauce. And I had to learn about protecting the recipe first before I did any sort of negotiation. So that became a learning process of non disclosure, non compete contracts. You had to make sure that you had the agreement in place that the manufacturer was going to keep the recipe a secret. Anybody who came in contact with it, they can't make variations of much sauce, so you can't make your own version and sell it. And so that's where it started. Like the legal part of it. I would tell anyone in the food industry, make sure you have those legal agreements in place before you even really have the conversation about what they're going to do for you. Because they have to look at it. They have to look at the recipe. Then you're going to be negotiating things like the amount, what is the minimum order? I can. You can't just go to a big manufacturer who takes on the Kroger contract and say, just make 100 bottles for me. They're like, no, you're going to make at least 10,000 bottles when you come to us. So you have to negotiate the minimums. You have to negotiate what type of supplies they have in stock. Do they use glass bottles? Do they use plastic? What does the manufacturer use for all of his clients? And then paying attention to their supply chain issues. Right now, everyone in the food industry is experiencing the supply chain issues. Whether it's glass supply or shipping issues. You need to know what impacts them, because whatever impacts them will impact you too.

Oh, this is great. There's so many cool angles. We could go with this. So many cool angles. And I let's actually focus on that last one. So understanding the supply chain issues, and one of the things that we talk about all the time in this podcast is our broad definition of negotiation, where we believe anytime you're having a conversation with somebody and somebody wants something, that is a negotiation. And so when you're thinking about the supply chain issues, there are going to be a lot of supply chain disruptions because of COVID and now with the war in Ukraine, all of that stuff is going to have an impact on the supply chain. And so there are going to have to be problem solving types of conversations that exist outside of what was anticipated when the contract was signed. And so you have to have these conversations in order to get that information so you can watch the news and understand that there are supply chain problems. But the real question is, how are those supply chain problems in general impacting your manufacturer in particular? So if we're focusing in on those types of conversations, can you walk us through what your goals were and maybe some of the challenges that you faced?

Right. So the first thing was looking at what I wanted to achieve that particular year in that particular frame of time. Say, for instance, I wanted to take on a client like qvc. So we just became a new vendor with qvc. They have an order in mind and they want it in a certain amount of time. You need to know what their goals are. Right now, everything is about delivery time. The customer has been ordering off of Amazon during the entire pandemic. And the great thing, the reason why Amazon sales went through the roof is because people like to be able to hit the button and it arrives in 48 hours. Similarly, I know that by the time QVC makes their decision, I'm going to have to have the ability to drop ship every order to the customer within 48 hours. But when they make the decision and they make the order is about a month. So I had to go back and ask my manufacturer, can you manufacture up to this astronomical number of pallets of sauce in a month? And not only them, but if your client asks for, they wanted it in a three pack, which is a custom package that it comes in. I have to ask the people who make boxes, do you have any supply chain issues? How long is it taking you to make corrugated packages right now? All right, so you're lining up everybody. Do you have any glass issues right now? No. Do you have any issues getting it to me in a month? No. Am I going to get a price break if I go over a certain number? That's important because I really do want a price break. As low as I can get my cost of goods sold, the better. That increases my profit margin because I know what's going to eat into it is the logistics, the shipping and marketing, and smacking my label on stuff. So I'm looking at all of it. Can you deliver it to me quickly? How much can I save in cost of goods sold per bottle and per package? And I'm looking at is everything sourced locally. So what was great about my manufacturer is I knew that he sources every part of my bottle. The label, the bottle, the sauce, ingredients all come from inside the U.S. so all the stuff that was happening with those cargo ships, that wasn't an issue for us. And that was good, because if we did have that issue, they can't guarantee a month at all. I would have been like, sorry, QVC this. I can't do it. So all of those things I looked at and then, did they have the ability to fund an order as big as I was about to place, and did I have to pay anything up front because it was such a big order? And that's a part of the food industry. Some people who are new, they don't realize that most manufacturers will make you pay up front. And that's why they can't scale, because $40,000, you know, who just has $40,000 to get put on the calendar? That's. That's basically what it is. We're not even going to put you on our calendar until you pay us $40,000. So all. Yeah, all of that, Kwame, all of that goes into, can you make this many pallets in a month?

Wow. What's really cool about this is that from the outside looking in, I wouldn't say that it seems simpler, but I would say that we have a more simplistic understanding of what it takes to get these deals done. But then once you get into it, you start to realize the nuances, the details. Because the questions that you were asking of the manufacturer were brilliant questions. Because you're not just saying, hey, do you have any supply chain issues? Things are crazy right now, but we're good. We're going to get it done. That gives me no information. No information. So it's up to you to bring that level of specificity and say, no, no, no. I'm going to make sure that every T is crossed, every I is dotted. So this specific thing, what is your status there? Can you handle that? Okay, now, this specific thing, because if you don't have all of it in order, then it could Risk it could jeopardize everything. Everything. So you really had to treat every single conversation as a very detailed negotiation to make sure that things could get done in the way that you needed them to get done. Does your company invest in professional development training? If you believe that your team would benefit from a negotiation workshop, all you need to do is go to our website, fill out the workshop request form, and then we'll set up a time to chat. These workshops are completely custom and we've done them all around the country. Negotiation and conflict resolution skills are beneficial across all professions, but they're especially useful in procurement, purchasing, sales, sourcing and contract management. Our calendar is filling up quickly and we even have some workshops scheduled for next year if you think you might want one. I'd suggest reaching out soon so you don't miss out. Check out the link in the description to learn more. And now back to the show.

Absolutely.

Yeah. And, you know, I'm assuming you can correct me if I'm wrong here, too. I'm assuming there had to be conversations internally. Let's just stick with this QVC deal because that's a big business deal. It also involved a lot of manufacturing. So you were not only negotiating with qvc, but you also had to negotiate with your manufacturers, the various manufacturers involved in the process. But I'm assuming potentially you had to have difficult conversations or negotiations with the people on your team to make sure they were bought in. Because, hey, this next month is going to be wild. Can we handle that?

Yes. That was tough because people probably think that my core team of Mutt Sauce is really big, but the core team of Mut Sauce is only two people. So it was. Yeah, the whole company is run primarily with me and my dad, and we surge staff when we need them. But, you know, I say it jokingly, but it's true. I can run the entire company with a laptop and a cell phone. And that, for me, going into the pandemic was a saving grace of not having to have so much overhead, but also being able to talk to one person and say, you know, these are the things that we need to take care of. The biggest thing that happened when I said we were accepted by QVC and this is the amount that we're potentially going to be shipping. He's like, you're insane. 1. Let's start with that. I was like, well, that's a given. I'm an entrepreneur. Of course, Then he said, that's not going to be an easy thing to do because he does fulfillment. So he understands the Terms drop shipping means you're going to be delivering each package. So the deal was they wanted the three pack, but they wanted them delivered to the individual. People are going to go on QVC.com and they're going to make an online order. You on the back end have to deliver each person's order. So the thousands of people ordering are getting their things. I thought at first that it was going to be okay, we're going to ship all the pallets to qvc. QVC will handle it. No, no, no. This is a pandemic. This is an opportunity for them. And many of the retailers have realized they can make you do it. You want to be on qvc, Right? We're going to make you do it. So we had to figure out how we were going to package these individual gift packs and send them out to individual addresses or all within 48 hours of them ordering. Yes. And so you back that up, right? You got to back it up. When the equipment, when the boxes arrived from the manufacturer of the boxes, they were flat packed, meaning they were just flat. They look like just flat stacked up on each other, not assembled. We have to find a team to assemble the box. Then there has to be inserts, custom inserts that hold each bottle securely in the box. You have to have a process for that. You have to have the staff that's going to assemble the inserts. You have to have a staff that's going to slip the bottles into each insert. Then you have a team that's going to seal them and then find someone who will print off thousands of address labels quickly. And then you have to arrange. And then you have to arrange for the pickup. So you have to, you know, whoever. The preferred logistics is what I think was ups. They have to make sure they have a truck arrive each day to pick them up and have the capability to do that, which I didn't know. Like, not all trucks have the capability to pick. Pick up pallets. So you have to make sure they have a lift gate. You have to make sure that they have a pallet jack. You have to. Yeah.

Wow.

I know. It seems like overkill, and I hope nobody's like, blood pressure's rising. Because as I started having the conversation with my dad and he's going through the steps, I was like, what? What do you mean? He's like, yeah, that's why you're crazy. Let me run you through why. This is, like, really insane. From going from, you know, a couple palates to now, you're going to be processing a lot of pallets.

Wow. So with that conversation with your dad, how did you get him on board?

Well, I tried to. It really is about communicating processes. And that's why I notice a lot of small businesses, they feel more stress when there's a lack of processes and the lack of effective communication about whatever you're doing. So when we sat down together and worked out a process for every single step of delivering a three pack to individual customers and just say, we're just going to replicate these, then we sat down and said, what is the average time that it's going to take? So I had to spell it out for him. This is the average time it takes to assemble one box. This is average time it takes to assemble one insert. This is how many staff that would probably take in order to get delivered in the time frame that QVC is asking us to deliver. And so then we run through the cost. How much does it cost to augment the staff to do all this? And as we answered the questions, it put his mind at ease, because when you first start out, he had more questions than he had answers, and that's why he didn't like it. So once you said, we'll have 10 people this day to help you, we'll have 12 people on this day to help you, we will get through this, no problem. Don't worry about that. We got the truck. The truck is secured. The truck will be there as a lift gate. We talked to the guy. Larry will be there. And so once he, you know, worked through everything, has a solution, he was on board.

It's such a great example, Charlinda, because I love your focus on the process, because, yep, it's a tough conversation and a lot of times what ends up happening, especially when there's something that's complex. There are a lot of things in business that are complex. You try to boil the ocean and it's just too much to handle at one time. But what you've done is you've kind of really mobilized the power of precision. So what are the key concerns that you have? Let's get all those out on the table. Great. Now let's talk about the process, on how we can address each of those key concerns. Because you could have come in and just said, oh, dad, this is a great business opportunity. We're going to make a lot of money. This is going to be great. We're going to get mutt sauce. On the national recognition with qvc, you could have focused on that, but that's not the language he was speaking. You had to understand what his specific needs were and meet those needs through that conversation.

Yeah, it's just got to meet people where they are and that. That works. Not just internal, but, you know, anybody that you're working with, you want to figure out what do they want? You know, you can't lead with my dreams and desires. They don't. They don't care. Like how you said, like, they care. So, yeah, it works a lot better when you think about what they need rather than what you want.

Absolutely. No, it makes a lot of sense. And now I know a lot of listeners are intrigued about the whole QVC deal because that is a big deal. Congratulations. That's huge. That's huge. I know again, for me, I might watch QVC or something like that. I'll be like, wow, what a great opportunity for this entrepreneur. And then I just go on with my life. But I'm sure there was so much that went into that. Can you walk us through what that was like?

Sure. It wasn't something that I was actively pursuing. It was a great opportunity. But there was one gentleman who had gotten approached by QVC and they had kind of floated, like, this is the process and this is the amount that we're looking for. And he was like, heck, no. No, thank you. But instead of just giving you a flat out no, I'm going to give you another suggestion. So the brokers that approached him then approached me and said, hey, this guy floated your name. Would you be able to do this QVC deal now? I think everything lines up the way that it should because it was E commerce, and I had not really done any E commerce before the pandemic. It was because the pandemic that we did E commerce. I didn't listen to any of my mentors because my backwards thinking was, who buys food online? Like, nobody buys food online. And the business suffered because I would not. I couldn't wrap my brain around it. But March 2020, I tell people I started from zero because most of our revenue came from in person events and festivals, like, in, like working with people. So when you're no longer able to be in a grocery store, you cannot do a festival. All of my events I watched on my phone is everything got canceled for 2020, the entire year. No refunds for whatever you booked. And I had a new baby. So I'm at home with a newborn with no revenue, trying to figure out. I'm on YouTube, trying to figure out how to turn on a website, because this is it. This is all I can do. So what everybody Sees was the process of me learning proper E Commerce. And part of it was standardization of cost. E Commerce allows you to standardize your cost of goods sold. So that three pack was something that I built for my own business to sell off of Muttsauce.com and they said, we want something like it. Can you give us an exclusive deal? I said, well, the only thing I can do is give you, like, a flavor combination that nobody else has good enough. But had I not spent a whole year 2020 trying to figure that out, I would not have been prepared for this moment. That arrived when they said, we want something standard and we need to do the pricing. So the first part was six months of pricing negotiations because I had spent the time standardizing everything with E Commerce. I needed to know how much it was per bottle. The cost of goods sold is how much it cost the manufacturer to make it. The label is a different company. So you have to get the standardization of the label price. You put that together, that is the cost of goods sold. Then you got to see how many. They're thinking, maybe you get a price cut because there's so many that they're ordering. But then you got to look at how much the box is. How much is the box? Oh, yeah, the insert is a different price from the actual box. All of these things go into the cost that I eventually gave to qvc. To give yourself a little bit of margin, you have to, I'd say about 30 to 40% margin on your end. And then you have the wholesale price, and then they're going to say, this is how much the retail price that we're going to put on the website. Is that too high? Would your customers or people who would look at it say, that is just, like, way too much for three bottles of sauce? So we had to look at what was the perfect number for everybody to walk away feeling like this was a good deal. I can live off of that. But that took six months. So the first. Yeah, you're in six months of, like, nobody even knows what you're doing. Like, I'm going, if you look at my social media, you have no idea that all this stuff is going on the back end. But six months of just trying to get those three numbers, my cost of goods sold, the wholesale price and the retail price.

Wow, wow, wow, wow. And again, sometimes it takes time. It takes time to get all of these things in order, but you have to take the time in order to put yourself in a good position. And I'm assuming, correct me if I'm wrong. But there are probably times during that prolonged negotiation where you might have wanted to jump the gun, maybe pull the trigger on something or kind of back out. And I'm assuming, and you tell me your experience on this, that there is a certain level of grit and resilience that is necessary in order to maintain that focus and attention on this deal, in order to see it through all the way to the end.

I think because it's a long game and the patience that it takes to actually do a negotiation like that. Yeah, a lot of people would say that's not for me. I don't have time for that. Because you have other things that you're doing. You're still running a company in the midst of doing all this. And that instant gratification feeling, sometimes you have to just quell that. You have to really just think about, think about in the end, like, what is, what is the benefit that you're going to get from finally making it through this negotiation? It's almost like Shark Tank. Sometimes being on Shark Tank is the win. And just getting on air is the way that you really want. People who didn't even get a deal, they're happy because like I was on Natural TV and I got all this exposure. The other thing is you have. You have something that is long lasting. The show is now on the Internet. People can go back, you can use that, and it can propel you to other opportunities. So I looked at it like that. I looked at it like, what in the end is the multitude of benefit from taking on this opportunity? And even if you. Even if it doesn't turn out to be a good deal because it doesn't always turn out the way that you hoped it would. I've been on Shark Tank. I got rejected, my show didn't air, but I have that as my point of reference of it still works out. There's still goodness in a miss. There's still goodness in an opportunity that didn't turn out the way that you wanted it to. You learned something. So it's perspective, Kwame. I guess it's just perspective on the opportunity itself.

Yeah. Oh, that's great. That is really great. I didn't know you were on Shark Tank. That's crazy. Yeah, that's so interesting. That's a conversation for another day. So when you think about the negotiation tools, techniques and kind of methodologies that you've utilized thus far, if you were to wrap it all up into like one takeaway, which is next to impossible to do, but you know, humor me here what would you say is that piece of advice that you'd give?

Yeah. Find the win for everybody, not just yours, but focus on how someone will win from working with you, from choosing to work with you or your company and show them all of the opportunities that can come from. And don't just think of that one moment or this one moment with the person or the company. Think of how it can flourish into a relationship, a long term relationship. I was a 2017 Bob Evans Farms winner, the Heroes and CEOs contest. And because I established a relationship with them from the first time that I won, you could go back and say, okay, I won, I went off and. And it was a great moment. But from that I have developed a great relationship with Bob Evans Farms. I went from being a speaker at their event to being a mentor for all the now winners. And I love the fact that something that started in 2017 is still a strong relationship today. So look at how that moment can become a long term relationship. And yeah, and even though I didn't get a deal at Shark Tank, my mentor ended up being Daymond John. And four years later and then from that meeting him, I'm now in his book and I still benefit from knowing him and being mentored from afar, I guess you would say. So don't look at, don't look at just now. Look at how this can last and one more. Meet people where they are.

Go deeper on that one. When you think about that term, what does it mean to you?

I think about mentorship because there's a difference between advising people and mentoring people. For me, mentorship is like meeting you where you are not just business wise but in your life. Because there are things in your life that are going to affect your goals no matter what you want to do. I have a toddler, so I can't just say I'm going to have a year of speaking circuit where I'm going to travel over the world. That's not realistic to where I'm at in my life. And so I know when I'm mentoring other people I like to start with where are you at in your life right now? Tell me about what's going on. Tell me about your parents, tell me about your kids. Does anything in your personal life that you love or desire to have, will it affect the business? And I want to make sure that I tailor my mentoring to make sure that we take care of that because you can be a multi million dollar company but one day you're going to need someone to take care of you and you hope that your kids love you and are not bitter because you sacrificed all the time with them while they were younger.

You're right. I have two little ones, too. I think about that all the time. So you're spot on there. But, Charlinda, before you go, remind the listeners again about your company, how they can connect with you and where they can buy the sauce.

Yes. So I am Charlinda Scales. Thank you for having me. Founder of Mutt Sauce, LLC. You can go to Muttauce.com and join the family.

Love it. Charlinda, thank you so much. Really appreciate it. Congratulations. You've just joined an elite club by listening to a full episode. You're now officially on the Negotiate Anything team, so welcome aboard. What most team members do is they subscribe to the podcast because that allows them to automatically get the latest episodes of the show. The best things in life lie on the other side of difficult conversations. Keep learning, keep practicing, and keep getting better. Your relationships will improve, your career will soar, and you'll have the confidence you need to get the most out of these crucial conversations. Again, thank you. Thank you for joining the team. We're excited to have you, and I will see you in the next episode. I'll catch you later.