How to pre-frame your buyers to plant positive thoughts
By Josh Foo, Senior Partner
Updated 9:25am AEST, May 19, 2020
(Onwardbull.com.au) - In the context of selling a business, pre-framing is where you create an intentional impression of your business before you meet with the buyers.
It is like you hearing a lot of good things about a person before you go on a date with the person. On the day of the date, you already have a very positive impression of the person. Your date will find it much harder to change your mind to the contrary. He or she will need to do badly at the meeting to change your initial impression.
So that is what pre-framing is...in a nutshell.
The Information Memorandum is a powerful tool. You can use this tool to create the thoughts you want in the buyers' minds before they meet with you.
To sell a business, you as the owner of the business must win the trust of the buyers. The buyers must trust you, like you, and have a rapport with you. For many smaller to mid-market businesses, buyers see you as the business. You are indistinguishable from the business.
Said simply, people buy people. You rarely can close the buyers at the first meeting, unless you are an amazing closer or salesperson (e.g. it's nearly impossible to persuade a person to buy your business at the first meeting). Buyers typically will judge you at the meeting by the way you talk, act, move, respond, and by possibly hundreds of bodily cues subconsciously that you are not even aware of.
It is extremely difficult to consistently build trust and rapport with every buyer at the first meeting. And of course, you'd hate to lose a buyer for that reason or any reason. Hence, you must find a way to let buyers know how great your business is before they meet with you. And if you can do that, then buyers will be far more forgiving at the meeting.
It is only human psychology that we want to validate our own beliefs and thoughts. If you have a persuasive Information Memorandum for buyers to read, then buyers are far more likely to go into the meeting with you to validate what was written in the prospectus.
We (as humans) hate to prove ourselves wrong so we often unknowingly or subconsciously go into a situation to validate our own beliefs about something. But you’ve got to plant those thoughts or beliefs into the buyers' minds first before they meet with you.
Perhaps the best way to illustrate is with an example.
If a buyer reads in the Information Memorandum that your business has achieved $2 million sales annually for the last 2 years, and at the meeting, you confessed that you are projected to only do $1.7 million sales this year, then it is probable that the buyers may think, "there must be a good reason for this", or "ahhh... that's close enough to $2 million". They might even conjure a reason to justify your shortcomings, “oh, there must cash sales that haven’t been accounted for".
But without the Information Memorandum, buyers will come into the meeting with a clean slate of mind or with a negative impression of your business (buyers will google you and if anything negative shows up, it will stick) then it’s going to be an uphill battle to win their trust. You will be walking on egg-shells. Anything you say, or don’t say.. any gestures you make or don't make... or if anything doesn't tally up with the buyer, the buyer is not coming back.
Unfortunately, this is the way our brain is wired.
The Information Memorandum is a powerful tool to pre-frame buyers, but pre-frame can also work in reverse. If your Information Memorandum is poorly written and isn't persuasive, then you may have invariably planted negative thoughts or the wrong impressions to the buyers. If buyers conjure up negative impressions about your business, then you will have little to no chance of selling.*