CINCINNATI BUSINESS COURIER
September 28 – October 4, 1987
INVESTMENTS
Charles D. Vaughan
WHO CARES?
WHO CARES, that is the first of two questions I seek to answer as I write this peerless prose each week. After all, if I expect you to spend five minutes of your valuable time reading the words in this space, I feel you should get a good return on that investment. This particular article is a good case in point. Who cares how a guy flaps his fingers over the keys of a word processor?
That is exactly the point! Why is it relevant to you? In this instance, I want you to see the parallel between my “selling” you on continuing to read this article and others trying to sell you on buying an investment. You see, there are two basic approaches to selling. The first is the “Me First” approach. That involves the salesperson picking out a product or service and aggressively selling it to the public. The second is the “You First” approach. That involves the salesperson diligently trying to find out what you want and then trying to get it for you.
It doesn’t take a genius to figure out that we would all prefer the latter, but from the salesperson’s standpoint the first is far easier and more profitable in the short run. The rub, in the investment world, is the fact that many firms preach the second and practice the first.
The buzzword in the industry is “financial planning.” The question arises from the way that many such firms go after the business: Exactly whose financial future is being planned – the client’s or the planner’s? From your viewpoint as an investor, it is important to get a good fix on where purveyors of investments are coming from. If a specific investment product is mentioned before your needs and concerns have been addressed, you should have a good clue.
The same situation arises in areas of financing small businesses. Owners who are seeking additional capital are quick to point out what they want and how soon they need it. Most loan proposals and business plans that I have seen imply that the subject company will do the investor or banker the favor of allowing him to invest in the company. But the private investor, whether a potential lender or potential equity holder, is equally quick to answer, “Who cares?”
The proposition often comes across, whether intended or not, as, “You add your million dollars to my stockholders’ equity of $200,000 and I will give you 40 percent of my company.” Surprising that investors don’t fight to the death over such a deal, isn’t it? The bottom line is, in the long run, To sell John Doe what John Doe buys, you must see your deal through John Doe’s eyes.”
This brings us to the second question I try to answer in bringing you these little gems: SO WHAT? Identifying needs and striving to fill them is a great place to start and is the basis of all value added service, but it counts for little unless there is performance follow-through. In stringing together these bon mots for you each week, I try to add depth to the basic ideas presented and to forward some evidence for their viability. Without backup, an idea is just fluff. So it is with a presentation. Whether it is the delivery of an investment strategy to fill a certain need or a proposal to obtain financing, the second question is crucial. What makes a concept sound, and how is it related to me? Why should I believe it will work as planned?
The “Me First” type of presenter will have a problem when it comes to addressing the so-what issues because they are derivative of the who-cares issues. The “You First” type of presenter has considered all so-what issues in order to be assured that the proposal will appeal to you. If the right answers aren’t given, you should never hear about the idea. When testing a presenter regarding a particular proposition, a good approach is to focus your questions on how the idea will fill your needs rather than merely asking for facts and benefits. The “Me First” type will probably respond (indirectly) by asking, “What do you mean your needs? I got a quota to meet.” You are then likely to be treated to another recitation of the whole sales spiel. The “You First” presenter is likely to take out a list of your criteria and match point by point how the proposal fits. Those seeking private financing must be ready to do the latter.
I hope this little dissertation has equipped you with some new ways to evaluate proposals as well as suggesting new strategies to succeed in making your own presentation. But if it hasn’t – so what? I’ve got a deadline to meet – who cares?