Provoke Buyer Response With An Information Memorandum OR
Prospectus


BY JOSH FOO

#information memorandum #sellbusiness #prospectus

25 Dec 2019

[Sydney, Australia]

The Information Memorandum (also known as a Prospectus, Sales Memorandum, Business Summary Report, Business Overview etc) is a powerful and critical document that persuades the buyers to take the next steps.

This is the part of the sales funnel that decides whether your marketing spent is 'paying off'.  

You may have spent a considerable amount of money on marketing to attract buyers, but if you can't persuade them to take the next step, then your efforts would have been in vain. Do not let a poor Information Memorandum (or lack of) to become your bottleneck. 

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  • An introduction to the business  
  • A brief history and explanation of your business (e.g. type of services/products offered, reason for the sale, etc)  
  • An overview of the business' customer base and clients S.W.O.T. (Strength, Weaknesses, Opportunities and Threats) analysis for the business, and suggestions to mitigate the weaknesses and threats  
  • Past Financials such as the Profit & Loss Statements, Balance Sheets, Business Activity Statements (BAS), etc.  
  • Business plan and future outlook
  • Lease details and landlord overview
  • Franchise reports and related information (where applicable)  
  • A list and description of the equipment included in the sale  
  • Employee and staff operations overview, including the Owner's role
  • Buyers' Frequently Asked Questions (FAQ) page
  • Identify the common objections and concerns from prospective buyers and have ready answers in the Information Memorandum to reassure them
  • Testimonials and references from Customers, Suppliers and Franchisor (where feasible)  
  • The sales process - instructions for the buyer on what to do next
  • Professional photos especially for retail, F&B and others B2C businesses.
IM Sales Funnel

ABOVE. If the IM does not persuade buyers, the funnel is jammed.

As every business is different, the above is only a guide and not limited to these items only. There is no one best way of writing it.  

The true mission of the Information Memorandum is persuasion. Thus, you can include almost anything in the Information Memorandum that helps to entice your prospective buyers to take the next step.

Role In The Sales Funnel There are many good resources online on how to prepare an Information Memorandum to sell your business.  

However, what you might not be aware is that the Information Memorandum is a critical sales tool within the sales funnel.  

An inept Information Memorandum can become a serious bottleneck in your sales funnel, as the chart above illustrates.  

If few or no buyers take action, then it is not a marketing issue but a conversion issue.  

Cafe

The more persuasive the Information Memorandum, the less buyers you need to attract to achieve the same result.  

On the flip side, an Information Memorandum that doesn't convert is as good as throwing your marketing money away. 

Achieving The Persuasive Cue Words tell. Story sells. Most Information Memorandum are informational and factual.  

Story connects with your buyers and appeals to their emotions. It builds trust. And trust is necessary for a sale. So, tell your story. Why are you selling? How did you get to where you are today? How does the sale impact your life?  

Good copywriting will boost your conversion rate. A good copywriter knows how to string words together that sell. So learn the art of good copywriting or hire a good copywriter.  

If story sells, then pictures says a million words. Professional photos are imperative to selling your business. It is not negotiable. (Aka, don't be tempted to DIY with your smart phone)  

You wouldn't want to tell a moving story and then allow bad photos to torpedo your conversion rate and chances of a sale. Just go onto Gumtree.com.au and look at the photos posted by private sellers - most of them are far from professional and shockingly bad.  

The 2-Edge Sword However, using the Information Memorandum is a 'double-edge sword'. It must be crafted properly.  

If it is poorly done, the document has the opposite effect. A bad Information Memorandum will actually repel buyers and completely clogs up the sale funnel (I know this because a newsagency owner wrote his own and did such a bad job that no buyers were interested. He decided not to sell in the end)  

Without an Information Memorandum, the sales funnel is narrow but 'drips' of buyers do come through, presumably on curiosity alone. But a bad Information Memorandum will actually confirm to the 'few drips of buyers' that your business is actually not worth pursuing further.  

In summary, the takeaway is:  

  • The Information Memorandum is a critical sales tool within the sales funnel 
  • The document must persuade buyers 
  • Professional photos is a must 
  • Do it properly or you may end up with no buyers at all.

Josh Foo contributed to this post.