Looking to buy a business? This is part 3/5 of the little things, the little mistakes that people make that they keep replicating and therefore can stop them from doing deals.
If you haven’t watched parts 1 and 2 yet, you can do so here:
- Part 1:
- Part 2:
Avoid Common Little Mistakes
So Part three, it’s common little mistakes that people make that are holding them back. I always talk about when you send the letters out to people, you should be sort of mono-y-mono. This should be a letter from you to them looking to do a deal. Again, it’s quite a common mistake because we recommend that you register an SPV, so you’re obviously registering a limited company. It’s really tempting then to kind of do a letterhead and a business card and to put the SPV, perhaps create a website for the SPV saying that you’re an investor. In our experience, this kind of corporatization of the investment vehicle doesn’t work. Basically when you send them the letter, it gives them something to Google. So our letters are kind of deliberately vague and crappy and that so that they’re encouraged to give you a call to find out what it’s about, and obviously then you get the opportunity to build a rapport and to turn it into a transaction.
Don’t “Corporatize” Your Efforts
If they see a company name there, they’ll go, “Oh boy.” And they’ll Google the company name. And if you have got a website, they’ll be questioning the quality of the website. If you haven’t got a website, they want to know why. They’re thinking, “Why haven’t you got a website?” They’re looking on company’s house (in the UK) and seeing the company was only registered recently, that it only gotten two pounds paid up capital. They start drawing all these conclusions in their mind, which all create barriers to them just picking up the phone or sending you an email. So it’s much better if it’s just your name to them. Now they might search your name on Google and as long as you’ve got your social media saying that you’re an investor, that’s pretty much all the kind of checking out they can really do. So yeah, so try and avoid corporatizing.
Make Them Feel Special
I think there’s another aspect to this, but I have no evidence for this. I think there’s an aspect that people like to feel a little bit special. Like you’ve selected them and that you’ve chosen their business and that you’re interested in them. And obviously as soon as you create a corporate approach, it looks like you kind of do this on a mass basis. And that your like a company that focuses on this kind of activity. And again, people always begrudge a profit, so they’re then looking. They don’t see it as this altruistic investor that’s coming along to save the day. They look at it as a business and it’s just viewed in a different way in my, in my opinion. So yeah, make sure that you don’t kind of use your SPV as a corporate entity. It’s just there to do the deal when you close the deal.
