Mediation Monday - The Ins and Outs of Mediation

Today's Focus: RESOLVING THE CONFLICT (Part III - After You Walk Out of the Room)

So by now, we've described (albeit briefly) the entire mediation process, from start to finish. So you know what to expect when walking into the room. Before moving on to more advanced topics, let's hit one more thing- what might happen once you walk out of the room.

IN CASE OF A MEDIATED AGREEMENT

HOPEFULLY, NOTHING: Ideally, everything of importance will be laid out in the agreement, and it will be adhered to. This is almost always the case. However, we live in an imperfect world, and sometimes people need a little prodding.

TIMEFRAMES: It's an excellent idea to lay out specific deadlines during your mediation. This has two major advantages: first, it pushes people to get in gear and follow through on their agreement in a timely manner. Once someone agrees to a deadline, he or she usually adheres to it, because they don't want to go through the headaches of court again. And secondly, if something comes up that will affect the timeframe, they will typically call and ask if it is okay - if that's the case, make sure both people sign something again so you have a record of the changed deadline.

CHECK-UP MEDIATIONS: Some cases have timelines that stretch over months or years. Often people will feel quite satisfied walking out of the room, but get a little bit skittish on the progress of the agreement a few months down the road. It can be helpful to stay in close touch with the other party, and check each other's progress. If trouble seems to be looming, I would recommend a check-up mediation before everything really breaks down. This is especially true if you can't seem to resolve it yourselves: if you're at this stage of the game, then you know the high costs of relationships falling apart. Try to stop your troubles before they get to that stage.

WHAT ABOUT THE MEDIATOR YOU USED?: If you do need a check-up mediation, it's perfectly fine to go to the same person who originally mediated your case. It can actually be an asset, since they know how you got to an agreement in the first place. However, be careful. Your mediator won't be able to lay down a 'ruling' on what one of the terms meant at the time of the mediation. It would be irresponsible of them to try to remember back to the original sessions and try to read minds, and it could potentially be a breach of neutrality. Instead, they can help the parties re-clarify uncertain terms themselves.

OTHER OPTIONS: If there is confusion within the original contract, there are other ways to resolve them as well. You could have your attorneys try to hash it out before court, submit it to an arbitrator, or (sigh) put it into court. Don't get me wrong, I know that court is a viable and appropriate option in many cases. However, I recommend trying other options before taking that step. Court cases can travel a long and rocky road.

IN CASE THERE IS NO AGREEMENT

TRYING AGAIN: As we discussed last week, you can take breaks of different lengths, and then try mediation again. Everyone involved might need a few hours, days, or even weeks before giving it another shot. Perhaps an important deposition needs to be taken, or a crucial ruling declared by a judge. Maybe you would like to try a different mediator. Whatever the case, mediation remains an option throughout the process.

OTHER OPTIONS: There are lots of other possibilities as well. In some cases, it's appropriate to submit your case to arbitration, or a panel of experts. You can submit your case for litigation, or proceed with it if it's already in the court system. If you have an attorney, it's a very good idea to consult them on how to proceed next - they are experts, and know your case very well. They will also be well versed in your dispute resolution options, so use them as a resource.

WRAP-UP

When you walk out of a mediation, it can be a major relief. You might also experience some 'next-day regret,' which is common in mediations but is by no means a sign of a bad agreement. Hopefully, everything will proceed smoothly after your mediation, but even if it doesn't, you've got a lot of options. Don't worry.

In next week's edition of Mediation Monday, I'll move on to a more advanced topic: breaking down the different types of mediation (yes, there are a few!). Thanks!

-Brandon

Small Business Saturday - How to Get the Most Out of Your Small Business

Today's Focus: Venture Land (Part I - What Venture Capitalists Look For)

So we've all heard about VC (or venture capital firms), where investors shell out hundreds of thousands of dollars (or more) to newer companies. Who do these VCs look for? What do they want to see out of your business? Let's check it out.

HIGH RISK, HIGH REWARD

THEY'RE IN THE MONEY: If you're looking for a big infusion of cash, as in $500k or more, VC firms might be the way to go. However, be ready - they want capital-intensive businesses with rapid growth potential. And I do mean RAPID. As in 25%-50% compounded annually. This is why you see so many computer-related and biotech companies being funded by VCs - they can offer the potential for fantastic growth that the firms are looking for.

LIQUIDITY: While not true in all cases, venture capitalists also look for investments that will be highly liquid very shortly As in, they can pay huge dividends very quickly, to be turned into the next big money-making opportunity. It's a fast paced, high risk game for them, and they want to be paid well for their guts.

WHAT ELSE DO THEY WANT?

PROPRIETARY BONUS: If you've got something that's locked down with legal protection, you may have a decent shot at VC funding. Possibly promising areas are biotechnology, health care, security, and groundbreaking computer technology.

EXPANSION POTENTIAL: If you've got a company with very few constraints on your growth, all the better. For instance, if you've got a project that can just as easily be a hit in Dubai as it is in Erie, PA, that's a good thing. Strong potential for national and international expansion is a big help.

GROWTH IN THE INDUSTRY: In addition to geographical expansion, there is also market expansion. How big can the market get for your product or service? Think about the demographics of your target market, and keep in mind the large expectations of the VC firms.

THE GOODS: If you want to attract VC funds, you've got to prove to them that you and your management team are very, very capable. Businesses can't grow to supreme heights without great managers, so you've got to show that you have the goods. Without the right management and leadership, even the best product won't be appealing enough. It's a tough game.

HISTORY: If you're an entrepreneur with a history, they'll likely look at your past businesses and search for experience and maturity. If you've successfully run a similar business before, you're more likely to get funding. Not only will they check you out by the numbers, but will probably judge you intuitively as well. If they get the right 'vibe' from you, your chances go up. That might sound silly, but it happens. Different funds also have different levels of flexibility - some might be quite conservative (relatively), others more willing to take a greater risk for a potentially greater return. Check where the money is coming from - is it from individual pension funds, or billionaire playboys?

TEAMWORK: Well-organized, professional teams with great interaction are really attractive to VC firms. If they see a whole team of intelligent people running the show from day-to-day, it seems less risky than a one-person-show. If you can demonstrate that you've got great people, and that they add to each other's talents, all the better.

EXIT STRATEGY: While it's always good to have an idea of your exit strategy, it becomes even more important with impatient VCs. They want to make 5-10 times their initial investment, and then get out. How long will that take? How will it be accomplished? Will there be an IPO, or maybe an outright acquisition? Ease of exit can be a huge factor in determining whether large pocketbooks will turn their attention to you.

WRAP-UP

Venture capital firms can offer huge amounts of cash if you can offer great potential for a huge return on their investment. They are very selective, and require a lot of pre-requisites. But if you meet them, they can be one source of cash for a capital-hungry business.

In next week's edition of Small Business Saturday, I'll start going into more detail about how you can get in with different kinds of venture capitalists. Thanks!

-Brandon







**I'd like to thank Arnold S. Goldstein, PhD, for his contributions to this article. For more great advice, check out Starting on a Shoestring, his excellent book.

Better Bartering Thursday - How to Negotiate More Effectively Everyday

Today's Focus: USING OBJECTIVITY FOR ALL IT'S WORTH (Part II - Developing Objective Criteria)

Now that we know a thing or two about how useful using objective criteria can be, let's dig in to how you might discern them in the context of a negotiation. Let's dive right in.

CRITERIA DEVELOPMENT

PREPARATION: First, know that it's always best if you walk into a negotiation prepared. So think things out, concentrating on the interests of both parties, and how you might face the situation using principled negotiation techniques. In this context, it means thinking up some objective criteria ahead of time.

FAIR STANDARDS: Discovering fair standards that everyone agrees on is a tough game. This is largely because there are multiple objective criteria available for you to choose from. Imagine you've got a car or truck that just got totaled. If you file a claim with the insurance company, several objective standards could apply: 'blue book' value, independent appraisals, what the car/truck could have been sold for, the original cost minus depreciation, what a court might award, replacement cost for a comparable car, etc. It can be tough to navigate.

HOW DO YOU CHOOSE?: First, ensure that the objective criteria you use are really independent of each other's will. In the car example above, the insurance company would likely want to choose the criteria that led them to pay less, the owner the standards that would net them more money. If you are arguing between two standards, try and find a third, mutually acceptable one. Use your imagination.

APPLICATION TO BOTH SIDES: You can use a test of reciprocity to determine whether or not a standard is really fair and independent of anyone's will. If you're leasing a car and the lessor tells you it's a 'standard contract,' ask if its the same one he or she uses when getting a car. This simple question applies in many situations, and can really get you pointed towards something more objective.

FAIR AND INDEPENDENT PROCEDURES

STANDARDS VS. PROCEDURES: If you've got a substantive question, like some of the ones listed above, searching out independent standards might be best. But another way to do it is to seek out fair procedures - sort of like the 'one cuts, the other chooses' method of dividing pie.

APPLYING THE PIE MODEL: This actually has tons of applications in the real world. In a small claims setting, think of two people trying to divide their assets. If one side divides up the assets, but the other side chooses which option they want, the deal is more likely than not to be decently fair.

KINDERGARTEN RULES REVISITED: Think of other methods for deciding disputes, going all the way back to elementary school. What did you do then? I would take turns, draw straws, let someone else decide, decide on a fair contest to determine the victor, etcetera. You can still use these methods now - just because we've grown up a bit doesn't mean they're not still fair procedures.

TAKING TURNS: Lets go back to the two people dividing their assets. They could agree to flip a coin or draw straws to see who goes first, then take turns in choosing items. Trading at the end of the day might also be perfectly acceptable. This might not work in every situation, but in smaller claims it can work wonderfully. It can seem childish, but if that's what it takes to get everyone to agree on procedures, so be it.

LETTING SOMEONE ELSE DECIDE: Another option is turning to outside help. It could be an expert, someone both people trust, a mediator, or an arbitrator, just to name a few options. If someone helps two people work through their dispute, gives them advice, or hands them a binding decision, it can sometimes save a lot of trouble.

WRAP-UP

Determining objective criteria, whether substantive or procedural, can be tough. But it usually sets you up for success further down the road, and prevents the battle of wills that often emerges without fair and independent standards.

In next week's edition of Better Bartering Thursday, I'll dive into how to start discussing your newly discovered objective criteria with the other side. Thanks!

-Brandon







**I would like to thank Roger Fisher and William Ury for their contributions to this article, and highly recommend their book, Getting to Yes, for more great advice.

Mediation Monday - The Ins and Outs of Mediation

Today's Focus: RESOLVING THE CONFLICT (Part II - When You're Still Stuck)

Sometimes, everyone's really trying in a mediation, and everything still gets stuck. You've been through joint sessions, brainstorming, caucusing, the back and forth of a million offers, and it's just not happening. What now?

STUCK

THE FIRST QUESTION: The first thing you should ask yourself when you're stuck is this: have we really done all we can? Remember, if you're n a mediation, it's because you came to some sort of impasse in the first place. Have you thought out every option? Explored every corner? Tweaked every deal? If not, you might not really be done. It's very common to feel like you're not getting anywhere. In reality, there is usually another avenue to explore.

CIRCUMSTANCES: Often, a stalling mediation is a result of exhaustion, frustration, or exasperation. Or any number of other emotions, for that matter. If you're been at it for eight hours and are just plain drained, fatigue might be killing your creativity. It might also be making everyone cranky and unusually snippy. Realize that it might be physical limitations and not the limitations of the deal that are holding things back.

SLOWLY MOVING OFFERS: If proposals are far apart, and movement towards agreement is happening very slowly, it can feel like an impasse. For instance, if you're $2 million apart, and each making $10,000 movements toward each other every half hour. The key in this situation is remembering that resistance is the sign of an unmet need. If you're stuck in the 'money' stage, and things don't look like they're going to work, you might have to go a different route. Try re-examining interests, exploring non-monetary options, and help each other better understand why the current deal isn't working. If each side looks at their own situation (and the other side's) rationally and realistically, there may be room to move.

BUT...

IF YOU'RE REALLY GOING NOWHERE: There are times when things literally just die, and people just stop talking. By the way, this is extremely rare. But it does happen. What do you do when you hit that point? There are a few options.

TAKE A BREAK: For whatever reason, everyone might need a break. Perhaps they need food, or just a few minutes away from a contentious battle. Perhaps they need a coffee break, and a minute to digest what's going on. Maybe they need a few minutes alone with their lawyer to re-examine the realities of the case. There are a million possibilities. But whatever the reason, sometimes stepping away for fifteen minutes can help. Or maybe you need two hours. Getting out of the situation can help you look at it much more clearly, and can provide the freshness needed for movement.

CALL IT A DAY: Sometimes, you need more than a few minutes. The mediation might need a full night off, complete with a fresh round of sleep for everyone. Don't underestimate the power of sleep; I've seen it do wonders for people (and their moods). Sometimes, mediations that seem totally stuck wind up settling in the first hour of the next day.

POSTPONEMENT: Occasionally, after the first round of mediation, everyone might want some serious time before they give it another try. They might want to re-examine facts, talk to new people, conduct more depositions, or something along those lines. Its okay if you call it off for a while, and then reconvene days, weeks, or even months later. Sometimes that's just what the doctor ordered.

COURT: If you've really given it your all, you can always have your day in court. Remember, the process is voluntary from the get go, and if you want to go to court, it's your decision. It's often more costly, time consuming, frustrating, and aggravating, but it also can be necessary. You've always got that option.

WRAP-UP

Reaching serious impasse in a mediation can be tough to deal with. Remember, though, that the reason you came in the first place was that you had a conflict you couldn't work through on your own. There are many ways around impasse, and trying a few (or many) of them is often worth the effort.

In next week's edition of Mediation Monday, I'll dive back in to how to proceed with a successfully settled case, going into more detail about what happens next. Thanks!

-Brandon

Small Business Saturday - How to Get the Most Out of Your Small Business

Today's Focus: SBA SMARTS (Part VI - Final Points to Remember)

Now that we've gone through some of the ways the SBA can help, here are a few key points to remember and some new advice. Remember, the SBA can be a great asset, as long as you know what you're in for.

THINGS TO KNOW - THE GOOD SIDE

WEAKNESS ISN'T ALWAYS BAD: Your credit doesn't have to be as strong for SBA money as it does for a bank loan. In fact, the SBA favors applicants that can't meet the credit and application requirements of other banks. So when you get a rejection from a traditional lender, don't lose heart.

LOAN LENGTH: Most banks have loan limits of 5 years. With the SBA, you can get loans that range from 7-10 years. That might seem like a small difference, but it drastically reduces your payments.

DISTRESSED AREAS: If you're working in an area designated as 'distressed,' most banks won't give you much of a shot at funding. But the SBA will - they want those areas back on their feet as badly as you do.

BONUSES: The SBA favors women and minority applicants to some degree. So if you're in those groups, it's even better for you. But that's not to say that white men, for instance, are extremely unlikely to get a loan. Just make sure you meet all of the requirements, and you'll have a good chance at getting funding.

THE SOMEWHAT UGLIER SIDE

COLLATERAL DAMAGE: The SBA is in love with collateral. Your collateral, to be more specific. If you have it, they want it as a guarantee. So think long and hard about what you're willing to risk if your business doesn't work out.

INTEREST RATES: All the advantages above come at a cost: higher interest rates. Expect to pay probably 2% higher than you would on a regular bank loan. Again, the loans are 100% secured if you get direct funding, and even if you get a loan guarantee they're taking on more risk. Unfortunately, you have to pay for it.

PERSONAL CONTRIBUTIONS: The SBA usually expects new ventures to fund 50% of their start-up cash. This can be difficult, especially if you're bootstrapping your new business. However, this isn't always the case, and they often modify their policies if you make a good case. Just expect that the 50% figure is the norm, and you'll know what you have to work for.

STRANGE DECISIONS: Often, the SBA process can seem a bit illogical. Since they prefer companies that have been turned down by at least two banks, you'll sometimes see them springing for deals that aren't as well thought out. This can be frustrating for the well-prepared business owner. Try to curb any negative feelings - the more prepared you are, the higher your chances for overall success.

WRAP-UP

The SBA's bureaucratic structure can be hard to work through. But it can be an important source of loans and guarantees when you're refused by other banks, and their terms are quite nice under the right circumstances (as long as the higher interest rate doesn't hurt you too badly). Consider them when looking for funding, and know what you're walking into before submitting your application - it'll save you months of headache.

In next week's edition of Small Business Saturday, we'll dive into another source of funding: venture capitalists. What are they looking for? How do you make your business attractive to them? We'll cover this and more, so stay tuned. Thanks!

-Brandon







**I'd like to thank Arnold S. Goldstein, PhD, for his contributions to this article. For more phenomenal advice, check out his book, Starting On a Shoestring.

Better Bartering Thursday - How to Negotiate More Effectively Everyday

Today's Focus: USING OBJECTIVITY FOR ALL IT'S WORTH (Part I - Why Use Objective Criteria?)

So far, we've talked a lot about exploring interests, inventing creative solutions, and how to maximize the value on the table. However, there are going to be times when your interests directly conflict, and there's no way around it. The seller wants to charge more, the buyer wants to pay less. The lessee wants to pay less rent, the landlady wants to charge more. How can you effectively handle this situation?

BY STRENGTH OF WILL?

WHO'S TOUGHER: Trying to decide who's going to win based on who will back down first is wildly ineffective. A lot of people try this, and jump into positional bargaining: they will accept this, they won't accept that. One side might demand concessions to win substantive points, while the other tries to make concessions for the sake of the relationship. The agreement is then shaped by individual will, not what's fair, right, or appropriate for the situation.

INDEPENDENT CRITERIA: If you try to decide based on the strength of will of each side, you'll run into a lot of problems, and one side will have to end up backing down if an agreement is to be reached. Instead, use objective criteria to get out of tough spots.

THE MERITS OF THE PROBLEM: In order to pull this off, look for established guidelines outside of individual opinions and willpower. If you're negotiating a price, for instance, check out fair market value, competitor's prices, replacement cost, etcetera, rather than the demands of one side. You might also consider turning to the law, established safety standards, blue book values, or other criteria depending on the situation.

BEWARE OF PRESSURE: Negotiators try a lot of different tactics. Some might try to bully you into submission, while others may attempt to give you a guilt trip for 'not trusting' them. These kinds of pressures come in all shapes and sizes. Be open to reason, but immune to emotional ploys, and always stick to your principles.

MANY ADVANTAGES

BONUS: This approach has a ton of benefits. First, the more you bring scientific merit, fairness, and efficiency into your agreement, the more likely it is that your final settlement will be fair and appropriate for your situation. Secondly, when you refer to outside sources, you benefit from past experience. Finally, agreements built on objective standards are more likely to stick. Neither side will feel like they have been harshly treated, and will therefore be less likely to wreck the agreement later on.

A RELATIONSHIP SAVER: When you argue based on strength of will, people get upset. One person has to give in or back down in order to reach agreement, often leaving them feeling bullied. Or, if no one backs down, you could end up arguing for hours. Using objective criteria can help keep things calm.

REASONABLENESS GOES THROUGH THE ROOF: When stuck in a positional negotiation, each side spends most of its time and effort defending its own side and attacking the other in an effort to make the other party concede a point or two. When you use objectivity to its fullest, you can use your much more productively: you decide upon fair standards, and work towards mutually acceptable solutions.

MULTI-PARTY TALKS: Objectivity is even more important when there are lots of parties at the table. Can you imagine a 10-part positional negotiation? It's not a pretty picture. Coalitions become necessary, and shifting your position becomes even more difficult when several parties have to do it in unison. If they have to clear concessions with higher-ups, you can literally waste hours on every concession. It's definitely not the way to go.

WRAP-UP

Sometimes, interests are going to conflict, and there's no easy way to decide who will prevail. Two people trying to decide the outcome of a negotiation by the sheer force of will is like them knocking heads together, repeatedly, for about 3 hours. It's painful, ineffective, and damaging to whatever relationship they once had. Using objective criteria saves time, creates fairer agreements, and makes settlements more durable.

In next week's edition of Better Bartering Thursday, I'll dive into how you can develop objective criteria for use in your negotiations. Thanks!

-Brandon






**I would like to thank Roger Fisher and William Ury for their contributions to this article, and highly recommend their book, Getting to Yes, for more great negotiation tips.