A winning effort begins with preparation.
—Joe Gibbs, former NFL coach, race team owner
At a recent entrepreneurship conference where there was a panel with angel investors, an audience member asked the following questions, “Do you take cold calls? And if you do, what should I, as a business owner seeking capital, say?” One of the panelists, Valerie Gaydos, founder and president of Capital Growth, answered the question like most people would expect an angel investor to. She responded that she doesn’t take cold calls. Instead, she screens potential companies with her partners who bring her quality companies. However, Timothy Reese, managing partner and general manager of Forge Intellectual Capital, surprised everyone by saying, “I do take cold calls, but your call shouldn’t be cold.” Everyone in the audience perked up to hear his advice on how to effectively reach out to an angel investor who knows nothing about you or your company.
When giving his candid advice, Reese emphasized that you must first know as much about his company as possible. For instance, if you are looking for an investment in your apparel company and his firm doesn’t invest in those types of companies, you are wasting your time. It is imperative that you research the types of deals that an angel has done and prefers so that you have a better chance of catching the angel’s attention. Furthermore, you should know the size of the deals, and if the information is available, how those deals were structured. It requires quite a bit of research and hard work on your end, but as another angel, Daymond John, on the panel mentioned, this could be the big deal of your life. You don’t want to go in totally cold and “botch” the opportunity.
If you are an elite entrepreneur, you don’t go into anything cold. Whether you are selling a product or selling your company to an investor, you should know as much as you can about the prospect. Nowadays, there is no excuse for being unprepared. A plethora of informational resources are at hand, the Internet being the most common. Entrepreneurs who go the extra mile to better position themselves in a sale always come out better than an entrepreneur who tries to wing it.
The biggest benefit of doing your homework is instantly establishing trust and credibility with your prospect, which goes a long way. As angel investor Reese suggested in his advice, an entrepreneur who approaches him and knows his background instantly earns his respect and ear. Likewise, your cold calls can warm up quickly when you’ve researched your prospects thoroughly. They will appreciate your efforts to understand their position.
Here’s one technique that exhibits how you can establish rapport when making cold calls. Don’t focus only on yourself or your product when you communicate with a prospect for the first time. Instead, mention the vital information that your research revealed. For illustration purposes, let’s say that your investigation uncovered the prospect’s previous buying history and their need to cut costs. You could start a conversation by saying, “I understand that you have purchased from company A in the past, but I would love to share with you how our product has been rated the highest quality by an independent source and costs less.” By saying this, you’ve done two important things: earned trust by reviewing the prospect’s buying history and sparked interest with a way to reduce costs. Using techniques like this gives you a great advantage over your competition.
The likelihood of closing a sale is directly linked to the preparation that goes into making that sale. Before you attempt to persuade any prospect your way, take the time to find out as much as you can about the person. You’ll never have a cold call again.