Refined communication skills can improve professional networks and help to build rewarding, long-term relationships. For small business owners, the art of closing the “deal” can make or break a company. Entrepreneurs not only need to focus on execution, it is essential they hone their communication and negotiation skills, especially as it relates to raising capital.
Small business owners tend to operate within their industry-specific networks, sometimes finding it difficult to communicate with “outsiders”, especially potential investors. It is essential for small business owners to focus more on face-to-face interactions, thereby not relying solely on digital communications. Studies indicate that 77% of small business owners believe in-person meetings yield a healthy return on their company’s investments.
Although creating successful partnerships or investor relationships seems like an art form, it also requires a strategy which relies on persistence, emotional intelligence, and research-based principles.
As a small business owner, three research-driven steps can help you reframe your position in dealing with potential investors and business partners:
1. Frame the Deal
Differences of opinion can often hinder a successful business deal, as such, small business owners should focus on how they frame their ideas. In scientific terms, a “frame” is a term that psychologists ascribe to theoretical filters or categorizations that help our minds store, manage, and analyze information. As our brains have a limited capability for processing information, they contextualize to understand and visualize new ideas within the context of their own perspectives. Different types of frameworks may determine how clients or counterparties respond to your business proposals.
In David Hoffeld’s book The Science of Selling, he offers a strategic set of contextual frameworks that are arranged according to the buyer which could ultimately change the way venture capitalists invest. For example, you could sell a house by presenting information about it in various ways. Three ways to sell the house include framing it in factual terms:
Frame #1: Aesthetics – Example: The house is white.
Frame #2: Economic – Example: The house is for sale for X amount of dollars.
Frame #3: Historical – Example: The house is 120 years old.
There are numerous ways to frame a deal, however, each one offers a unique and varied perspective that could help directly relate to the buyer’s mindset. The order in which you present information can alter the perception of the investor or customer. Start with the preferred framework and then rearrange your pitch accordingly so you can present your value proposition in the most effective manner.
2. Change the Frame
It’s not easy to change someone’s mind if they’re dead set in their ways. After you present different frameworks to your associate, there are ways to help him or her see your point by reframing your position. In a University of Toronto research study of 1,322 participants, scientists discovered how to make the most convincing political arguments to people with opposing political beliefs. The experiment found that people complied more with a political message if it was reframed in a way that addressed or leveraged the existing political beliefs of its listener. One controversial subject chosen for the study was gay marriage. Liberal participants were more likely to be persuaded by the subject when it was framed through a message of equality and fairness. Politically conservative people found the argument more convincing when framed from a perspective highlighting the loyalty and patriotism of same-sex couples.
The scientists concluded that challenging an opposing person’s viewpoints only makes the convincer seem combative. Rather, it’s best to connect your own position to their beliefs. Often, you might have to empathize, listen, and understand their perspectives which can prove difficult for some salespeople. For example, as a business leader who seeks capital, you need to understand the logic behind an investor’s perspective.
Small business owners should start off by asking the opinions of the other party, as well as fostering deeper relationships with them, thus allowing the business owner to better understand what the other party may be looking for in a product or investment. Harvard Law School’s Program on Negotiation also suggests that owners show investors how both of their goals are interlinked, or point out shared social identities that could lend legitimacy to opposing viewpoints. In essence, as you afford empathy to understand their background and goals, and reframe the discussion accordingly, you can help an investor genuinely think from a different perspective. As you make your case, these skills demonstrate how adaptable you can truly be.
3. Create a Frame-Changing Script
Small business owners might also want to use a frame-changing script to acknowledge an investor’s concerns, and show that your ideas and perspective aligns with theirs. Phrases to reframe your stance around a shared belief include:
- “I understand your commitment to doing what’s right for your investment portfolio. May I offer a couple reasons as to why this investment may strengthen your position?”
- “I understand you want to improve performance to achieve set goals. I’m concerned that if we don’t invest in these specific areas, we may actually lose sales. I have a plan that can improve sales, and grow our customer base, allowing us to meet our mutual goals.”
Since small business owners, by necessity, generally have significant experience working with close-knit teams, they may have less trouble facilitating the mental shortcuts that influence others. About 89% of small business owners report their personal relationships have an impact on the way they run their business.
The research supporting reframing strategies demonstrates that the key to winning an argument or closing a deal, is to first understand someone else’s perspective and then connect those beliefs to the ones centered around your business model. In the end, with empathy and the right strategy, reframing can help to secure the success of your small business.
This was originally published on SCORE NYC on March 10, 2018.