You probably heard the saying “it takes money to make money,” and that is especially true in business. There is only so much you can do when bootstrapping a new business with your own money. In a lot of cases, you will need to raise money from other people.
As an entrepreneurs, it’s a must have skill to be able to pitch your business, whether it’s to potential customers or to investors and banks to raise money for your new business start-up. The concept of pitching businesses for funding has become quite popular through shows like Dragon’s Den and Shark Tank. While it might appear that pitching a business requires a unique, mind-blowing idea or concept that no-one has seen before, the reality is somewhat different.
Business investors are looking for plans and ideas that make sense. While brilliant ideas that “might” make money are lovely, they are more interested in realistic plans that make sense. If you’ve got an idea, make sure that your pitch is as robust as possible so that you can quickly raise the funds you need. Here are some ideas to follow and learn from in making a killer pitch.
The Elevator Pitch
The Elevator Pitch is a simple concept. Imagine you are stuck in an elevator with the person you are pitching to. As the ride is often quite short, what would you say to get them interested in 30 seconds? Sum up what your offer is, why its unique, and what it does. If you struggle to explain what you’re selling, you will have difficulties persuading others on its value. Remember, while you’re only looking to pitch for 30 seconds with the elevator pitch, you could be asked to expand on different areas so you should have those answers ready.
Small Business Success
Regardless of how ambitious your idea is, you will need to start small and to that end, you need to demonstrate your own real-world experience. By having a reliable management team along with you, it will help inspire confidence in investors. You can build their confidence even further by demonstrating:
- Business Evidence – your presentation and pitch need to include details of your cash flow and the customers you have already obtained. If you have client testimonials and market research about your product or service, that will help. Investors are looking for companies that have already demonstrated they are successful.
- Experience – a fully fleshed out organization is going to be a key to gaining an investor. Show that you have covered all of the business essentials like accounting, sales, customer service, marketing, and operations. In addition, ensure that you have an experienced management team that is able to understand the challenges in the marketplace and has worked in similar businesses in the past.
Make Realistic Forecasts
Successful businesses do not happen overnight. They grow slowly, and smart investors know this. Do not pitch a get-rich-quick scheme as that will only fail. Instead, build out a realistic plan that makes sense. This plan should include at least three different scenarios. These scenarios should consist of a worst-case, a practical case, and the best case. Make sure that your plan paints a clear picture. Include market data and analysis from experts as well as competitor information. Have clear explanations for any of your assumptions so that you can respond to any question asked.
Understand and Focus on Starting Costs
Costs are critical at the start of any new venture. Make sure that you account for your expenses carefully and that you can justify them. New businesses that keep a tight rein on costs are more likely to be successful than ones that do not, and investors know this. Try to avoid awarding yourself a large salary and keep your capital costs low also. Focus on function over fashion – if an older PC will work, use it, and wait for that new Mac until you are more well established. Where possible, put in a buffer to help you avoid any unforeseen financial impacts that you might not have considered.
Crawl, then Walk and Finally Run
You need to demonstrate success at a small scale before you can ask for millions. By showing investors you have a handle on providing a service or product at a profit, they are more likely to invest. This applies even more to more significant investments. Demonstrate that you understand the pitfalls of manufacturing and delivery – even if only to a small number of clients first. That success will help you grow in confidence and will also show your prospective investors that you know how the business works and are ready for growth.
If you want to nail your pitch and land an investment deal then there is no one better to learn it from than a Shark. The people’s Shark, Daymond John is doing a 100% FREE webinar to teach you exactly just that!
Daymond must have heard at least hundreds of business pitches on Shark Tank by now. He can definitely show you how to crush your next investment pitch and take your business to the next level!