December 2, 2019 5 min read

Opinions expressed by Entrepreneur contributors are their own.

Just a few weeks ago, I was standing outside of San Francisco’s Ferry Building in the pouring rain on the phone. Torrential rain in San Francisco is unusual for October, which is normally considered the city’s ostnesible summer. But in this case, it contributed to a sense of evil foreboding, as what I expected to be a friendly and collegial call quickly took a nasty turn.  

“We thought about this overnight, and we are not a good partner for you,” said the individual on the phone, a potential business partner. 

This shocked me. You see, over the past few months, I had developed what I thought was a genuinely friendly relationship with this individual; always responding to texts, calling early mornings and on weekends. He was always right there. In fact, he was the individual who took the initiative to get our relationship started. 

“Would you consider a different economic model?” I responded. “Maybe one on performance that gets you more of a bonus over the next two-to-five years?”

“No. We’re not the right partner.” 

And we hung up. 

Related: Why One Young Entrepreneur Turned Down Mark Cuban

Saying no to a potential business deal or partnership, like what occurred in the above conversation, can be really hard. In fact, according to Qualtrics, humans tend to have a “yes bias” that makes it much easier for us to agree to a potential action than say no or dissent. This is even more acute when you are an entrepreneur, which is all about cementing partnerships, hires and relationships in new deals. 

But not every potential relationship or partnership is a good one. In fact, it’s often more beneficial to say no. For instance, venture capitalists say no to more than 99% of the pitches they hear, as the law of returns requires them to place bets on founders they think have the highest likelihood of winning.

Still, saying no can have drastic repercussions. It can ruin friendships, tear apart relationships and create bad blood between formerly peaceful friends. Even worse, it can create new competitors or even enemies. How do you avoid this fallout by  saying no the right way? 

First, entrepreneurs should refrain from sending inappropriate signs and signals of intent during the negotiation process. Second, entrepreneurs should communicate that they are not the only decision maker and that they also rely on the input of others in making a final call. Let’s break each of thosee down.

Sending the Right Signals

Back to my earlier story, perhaps the most unnerving aspect of the rejection was that it seemingly came out of nowhere. As I described, the prospective partner had taken all of the initiative in setting up meetings (taking me out to dinner, genuinely showing an interest in our partnership, etc.). I could tell they were thinking concertedly about our relationship and really cared. Up until the last minute, of course. 

During the negotiation of any partnership or deal, people send a variety of signals, both intentionally and unintentionally. This can include apparent attributes like frequency of communication or introductions to other parties. But there are also more implicit factors, such as the tonality of calls and conversations and body language during in-person meetings. 

In order to prevent the wrong signals from being sent, entrepreneurs should convey strong interest without making a soft commitment in their language or actions — either expressly or implied. Choose selective language in negotiations and deal-making that does not convey that a “deal is done” before it is formalized and signed. Do not be aggressive in setting up meetings, calling at odd hours and having long personal conversations. When meeting in person, use body language that is professional and warm but not overzealous. Focus on what the other party can infer from your actions and moderate them accordingly.

Making Collaborative Decisions

When I was younger, my father and I used to shop for cars together and haggle. Often, at the end of the negotiation, my father would throw up his arms and say, “I have to talk to my wife.” What I didn’t understand at the time, but I see with absolute clarity now, is how my father was signaling that he was not the final decision-maker.

Similarly, during the negotiation process for any prospective deal, entrepreneurs should look to communicate that they are but one of many decision-makers, and that until all other stakeholders have weighed in, a deal is not final. This can be as simple as referencing other founders, a board of directors or divisional presidents and vice presidents who may be most responsible for the implementation of a given partnership or product or a daily basis. Either way, you will be sending a signal to the other party that you do not have sole say and that if any potential partnership goes by the wayside, you are not squarely to blame. 

Related: In Order for Your Business to Grow, You Need to Turn Down Customers

Businesses are built on personal relationships. Navigating how to say no is key to preserving connections you may spent decades nurturing. And most essential is sending the right signals and communicating that others need to give their opinion before any deal is completed. This ensures that if no is the answer, the impact on personal relationships will at least be lessened.