The "hidden psychology" in getting private money

 

Did you know: Theodore Roosevelt was the only U.S. president to deliver an inaugural address without using the word "I". Abraham Lincoln, Franklin D. Roosevelt and Dwight D. Eisenhower tied for second place, using "I" only once in their inaugural addresses.

 

Why is this so interesting?

 

Because it has a lot to do with how successful you will be when pitching your private money deal.

 

(yes, I use the term "pitch" because....well...that's pretty much what it is)

 

For anybody that's had any sales training, one of the first and most important things you learn is that the person you are trying to sell to doesn't care about you (using the term "I)

a whole heck of a lot. The prospect only cares about "what's in it for me." Thus, it is commonly said that most people tune into radio station WIIFM (what's in it for me).

 

If you pay attention during the next conversation you have today, be conscious of how many times the other person uses the word "I". This is a big indicator about how

they see things - and how they prioritize in their head. On  many occasions a salesperson will call on me from a major company, looking to gain business and there just doesn't seem to be anything on the top of the salespersons mind other then themselves or their company and how great their company is

 

What about me?!

 

When you are raising private money, it's not enough to know the numbers of the deal, the tax implications or the securities laws. Those things are all important, but they don't mean a darn thing if you can't get somebody to agree to place funds with you.

 

People really want to know: what's in it for me?

 

When the president makes an address, the American public wants to know: what's in this for me?! Politicians that promise big benefits to their constituents are usually the ones that get elected.

 

Similarly, when you present a private money deal, you must show your investor what's in it for them. Don't fall into the trap of showing all the features of the deal and not highlighting the benefits. For instance, discussing the market comparables and rate of return has a role, but those things are not the benefit for the investor. The benefit for the investor is: "high level of principal protection so you never have to worry if your funds are underwater," and "your money will double in 5 years so you can easily afford that second home without borrowing...", etc.

 

To become successful in raising private money, you should always think and speak in terms of benefit to your investors. Connect the dots for them. Talking about how great you are at finding deals and how well-oiled your house selling system is doesn't mean a lot to your investors unless and until you convey those as tangible benefits for them. Even high net worth investors who are savvy will want to know WIIFM.

 

What you should do right now is make a bullet list of the benefits (not the features) of investing with you for your private money investors. Then, commit this to memory and then slowly let it marinate in your mind. Condition yourself to communicate with prospective investors with a "you" approach instead of an "I" approach.

 

Here are some to get you started:

 

-12% rate of return means your money will double every five years like clockwork

-secured mortgage position gives you the peace of mind knowing your principal is well protected

-investing in a tangible asset you can look at, touch and feel - not just a piece of paper or blip on a computer screen

 

 

Take some time and come up with at least 7-10 "benefits" of placing funds with you. And, remember to keep your prospective investors tuned into WIIFM.

 

-Happy Investing