The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

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What Is A 'Buffer'?

A Buffer is a third party empowered to negotiate on your behalf. Agents, attorneys, etc. are all examples of Buffers.

Depending on the agreement, your Buffer's priorities may be very different from your own. Be mindful of Incentive-Caused Bias.

If possible, work with a Buffer who is willing to accept a flat fee. Their interests will be more aligned with yours when they are paid no matter what happens.

Don't let your buffer replace your own judgment.

Don't give total control of your decisions or resources to your Buffer.

Josh Kaufman Explains 'Buffer'

In all but the most extenuating circumstances, Common Ground ensures that every deal is in the best interest of all parties involved. However, there may be parts of the agreement or discussion where one party's gain is the other's loss. If you're interviewing for a job and you attempt to negotiate a higher salary, any gain in the salary that you make is necessarily the employer's loss.

Depending on the situation, these aspects of the negotiation can be tense. You want to push for as much as you possibly can, but if you push too hard, you risk torpedoing the deal and permanently harming your relationship with the other party. In these cases, it's helpful to work with someone who can help you negotiate a good deal without risking the relationship.

A Buffer is a third party empowered to negotiate on your behalf. Agents, attorneys, mediators, brokers, accountants, and other similar subject-matter experts are all examples of Buffers.

Buffers who have expertise in specific types of negotiations can be extremely valuable in helping you get the best deal possible. You don't have to know everything about arcane topics like tort law and tax policy if you enlist the help of an honest and capable buffer.

When a professional athlete is negotiating a contract to join a professional sports team, he or she typically enlists the help of both an agent and an attorney. The agent's job is to obtain the best possible compensation for the athlete, and the team's manager and owner know this. They can remain positive about hiring the athlete even while the agent plays hardball. In the end, the athlete's overall compensation is improved despite the agent's fees.

The same thing happens with the athlete's attorney, who can argue for the inclusion or exclusion of certain provisions in the proposed contract. An attorney can make these proposals with much greater force and effect based on their knowledge, experience, and expertise. Together with the agent, the attorney can work with the team owner and manager to ensure the athlete gets the best deal the team is willing to accept, without adversely affecting the athlete's reputation or goodwill.

Buffers can also be useful in order to add some time or space to a high-intensity negotiation. It's often quite useful not to be the party that has the final say. Being able to say, "I need to discuss this with my agent / accountant / attorney" before giving final approval on a deal is a valuable check-step that prevents hasty or unwise decisions.

Be very mindful of Incentive-Caused Bias when working with a buffer. Depending on the arrangement, your buffer's priorities may be very different from your own.

For example, real estate agents act as a buffer between the seller of a property and potential purchasers. If you're looking to buy property, it's often useful to work with a buy-side agent, provided you're aware of how they're compensated.

Agents are typically compensated on a commission basis, so it pays to be wary if you're using them on the buy-side of a deal. The agent is compensated if and only if a Transaction actually occurs. Accordingly, their first priority is to complete a deal-any deal-regardless of whether or not it's actually a good deal for the buyer.

If at all possible, work with a Buffer who is willing to accept a flat fee in exchange for services rendered, whether or not the deal happens. If your buffer will be paid regardless of what happens, their interests will be more closely aligned with getting you the best deal possible, which enhances their Reputation.

Don't let your Buffer replace your own informed judgment. One of the worst things you can do is relinquish control over your decisions to your buffer, particularly if your interests aren't exactly aligned. Many unwary investors have found their savings depleted by giving carte blanche control to "investment professionals" who are compensated every time a security is bought or sold. By "churning" the account, the broker is legally able to rack up thousands of dollars in unnecessary fees.

As a rule of thumb: don't give anyone unfettered control over decisions that directly affect your money.

Buffers can be a hugely valuable resource as long as you're clear about how they'll be rewarded, what they're responsible for, and how you intend to work together.

Questions About


"Zeal without knowledge is the sister of folly."

Sir John Davies, Elizabethan poet and lawyer and former attorney general of Ireland


From Chapter 3:

Sales


https://personalmba.com/buffer/



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The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:


About Josh Kaufman

Josh Kaufman is an acclaimed business, learning, and skill acquisition expert. He is the author of two international bestsellers: The Personal MBA and The First 20 Hours. Josh's research and writing have helped millions of people worldwide learn the fundamentals of modern business.

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