04 Jul 2019
What is the meaning of pre-frame?
How do you use pre-frame to sell a business?
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 stuff it up majorly to change your initial impression.
So that is what pre-framing is...in a nutshell.
To pre-frame buyers, the tool we use is an Information Memorandum - a sort of 'prospectus' for buyers to read when they reply to an ad.
The prospectus is a powerful tool. You create the thoughts you want in the buyers' mind before they meet with you.
To sell a business, you as the owner of the business must win the trust of the buyer. The buyer must trust you, like you and have rapport with you. For many smaller to mid-size businesses, you are the business.
In short, people buy people. So you can’t rely on your skills to close the buyers at the first meeting, unless you are an amazing closer or salesperson. Buyers typically will judge you immediately at the meeting on the way you talk, act, move, respond and on another 100 bodily cues that you haven't even thought about.
It is just too hard to consistently build trust and rapport with every buyer on the first meeting. And you'd hate to lose a buyer because you have had a bad day.
So 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 prospectus 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 (humans) hate to prove ourselves wrong so we often unknowingly or subconsciously go into a situation to validate our own thoughts as much as possible.
But you’ve got to put those thoughts into the buyers' mind before they meet with you.
Perhaps the best way to illustrate is with an example...
If a buyer reads in the prospectus that your business is doing $2 million turnover a year for the last 2 years, then at the meeting, you revealed that you are projected to only do $1.8 million turnover this year, then there is a good chance that the buyers will think, 'there must be a good reason for this', or 'that's close enough to $2 million).... they might even make up a reason on your behalf, like “oh, there must cash sales that hasn’t been accounted for”…
But without the prospectus, buyers will come into the meeting with a clean slate of mind or with a negative impression of your business (yup, buyers will google you - it's a sure bet), 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... and if anything doesn't tally up with the buyer, the buyer is going to disappear faster than Houdini.
This is part of our human psychology and it is operating at a subconscious (unknowingly) level .
The prospectus is a powerful tool to pre-frame buyers, but pre-frame can also work in reverse. If your prospectus is poorly done, written badly or isn't persuasive, then buyers will form negative impressions about your business and you will have no chance of selling. (To download a PDF copy of my #1 prospectus template, click here).
Note: The prospectus is called many names - such as an Information Memorandum, Sales Memorandum, Business Overview Report, Business Summary etc. Don't let the names confuse you. But they should all have the same purpose - to persuade buyers to take action.
Josh Foo contributed to this post.
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