How to gain the trust of investors buying a bakery?

January 2020 | Przegląd Piekarski i Cukierniczy (Baking and Confectionery Review)

SELLING THE COMPANY

It is said that in business trust is the most important thing. It does not matter whether we are speaking of a one-off transaction or of cooperation lasting for years. The basis of every cooperation is mutual trust. It is particularly important when we are speaking of a transaction for the sale of a bakery. Trust is built up over years; a transaction for the sale of a confectioner’s shop or a bakery usually lasts a month or two. How can one gain in a short time the trust of investors interested in buying our plant?

There are six psychological methods which should be observed in order to win the investor’s heart in a short time.

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1. One should always tell the truth. If the bakery has some shortcomings and dark sides, they should not be concealed. Sooner or later the truth will come out. If the seller is honest about embarrassing matters which lower the company’s value, the investor will believe more in the strong points of the company being sold. One should not overdo it in building future forecasts of profitability and sales. One should rather be moderately sceptical. One should not embellish and exaggerate the bakery’s strong points, because this makes a bad impression and builds distance in the buyers. An old German proverb says: „He who has once lied in a small matter will not be believed in a great matter”.

2. Be a man of your word. Keeping one’s word is the initial condition for building trust. When an investor notices that the person selling the bakery is conscientious in small matters, they will have greater trust in serious matters connected with buying the company. As the New Testament says: „He that is faithful in that which is least is faithful also in much: and he that is unjust in the least is unjust also in much.” [Luke 16:10]

3. Keep the sale secret. Everyone who is selling their company is excited and usually has an enormous temptation to share this joy with someone. In this case emotions must be kept in check. If the details of the negotiations are revealed, this will certainly be the cause of a partial loss of trust on the part of those buying the bakery. It is a rule to keep the intention of selling the company in deep secrecy both from the employees and from the local community.

The uncertainty which appears during a sale transaction that often lasts several weeks is a factor which may lead to unforeseen events such as the departure of the best employees or the loss of cooperating partners. In order not to lose the buyers’ trust, secrecy should be maintained – and nothing strengthens mutual trust as well as a shared secret.

4. The company’s documents must be in order. There are many studies confirming the connection between mess and the loss of trust. A well-ordered set of reports, transparent contracts and statements will make it easier for the investor to get to know the company. Transparency builds trust. Order in the documents builds an intuitive conviction about the transparency of the bakery’s finances, whereas mess may arouse investors’ distrust.

5. The bakery owner should show investors a great deal.

This is a further psychological trick which in a short time can significantly strengthen the buyers’ trust.

Investors should be shown round the bakery at a time when the employees are no longer at the plant. Studies show that frequently showing investors round the company lowers their ability to question facts and to formulate doubts. What is shown is always more true. Showing people round is also an excellent opportunity to tell them about the company’s history and its current affairs. This too builds mutual trust.

6. Information about the bakery being sold should be passed on gradually. One should not show everything at once. Gradually initiating the investor into the world of the confectioner’s shop or bakery deepens the mutual relationship and builds trust. If the seller is too open and frank at the beginning of the contacts, the buyers will acquire a distance towards them which will later be difficult to eliminate.

Trust is the most important component of the transaction; it is the binding agent joining the needs and hopes of buyers and sellers. Trust is built through showing mutual respect. It has an enormous influence on the success of the sale of the bakery.

It is difficult to build trust within a few days. Thanks to the application of a few effective psychological tricks it is, however, possible, and in the longer perspective very profitable.

Wojciech Moszczyński

Wojciech Moszczyński — graduate of the Department of Econometrics and Statistics of Nicolaus Copernicus University in Toruń; specialist in econometrics, finance, data science, and management accounting. He specializes in the optimization of production and logistics processes. He conducts research in the area of the development and application of artificial intelligence. For years he has been engaged in the popularization of machine learning and data science in business environments.