Having a great business idea is a turbulent experience. First, there’s the thrill of invention, followed by the buzz of envisioning success — then comes the fear that you’re delusional, consisting of second thoughts and fevered comparisons to existing products, companies and concepts. If you’re lucky, you’ll emerge from that uncertainty confident that you’re onto something… but you’re not the only one who needs convincing.
Realistically (which is to say, unless you’re already wealthy), getting a new business venture off the ground is going to require external investment, and any potential investors worth pursuing are going to be even more rigorous about deconstructing your ideas than you were in your post-revelation panic.
So how do you not only endure that firestorm of questioning but actually emerge from it with some serious investment offers? Here’s how you should frame your business pitch:
Address Your Likely Competitors
The first thing any discerning investor is going to do (most likely before they even meet with you) is looking for potential threats to your idea. Assuming you’ve covered your bases as far as intellectual property goes, such threats will come in the form of other companies with the advantage of having established businesses that may overlap with yours.
Because this is going to come up regardless, you need to get out in front of it by finding such competitors and ensuring that you have something fresh to offer. Where are their weaknesses? What could you do better? Explaining how you’d defuse the various threats to your success (using reasoned arguments, not empty reassurances) will go a long way to convincing an investor to take a serious interest in you.
Using competitor research tools can arm you with a lot of useful information. Try an influencer search platform to identify people with social connections in your targeted field, and see how they relate to your main rivals. Get yourself into a position of being able to explain precisely how you’ll thrive in the court of popular opinion — how you’ll grab and keep attention.
After all, investors wouldn’t just be investing in your idea — they’d also be investing in you, and if you come across as unwilling or unable to do basic research before asking them for a sizable amount of money, then they’ll be extraordinarily unlikely to consider you adequately competent.
Provide Realistic Financial Projections
How much money will you need for your first year of operation? What will your emergency fund consist of? How will you need to price your products or services? When can you sensibly expect to first turn a profit? You’ll be fielding numerous questions such as these, so arm yourself with all the financial information you need using forecasting software, regardless of how flattering or unflattering it may be.
Something that can be useful for both this and showing proof of concept is running through a soft launch while you’re still in early development — a soft launch is essentially running a trimmed-down version of your planned business to test the waters without needing the resources for a full launch. If you’re hoping to get your products into nationwide stores, for instance, you can pick a suitable store design tool, set up a basic e-commerce site, and gather sales data as well as evidence (buys, buzz, and feedback) that your product has potential. Or, build a landing page using InstaPage and get people to sign up for your launch (and give you some pre-launch feedback and data, of course).
Look at it this way: if you secure an investor through lying and claiming that you’ll surge to profitability within months, you’ll probably be caught in that lie, leading to the dissolution of the investment partnership. If you’re painfully honest right away, however, you’ll likely earn some measure of respect — and if your idea is strong enough to endure some early struggles, they may consider it a bet worth taking (success takes time, after all).
Show Your Natural Personality
As noted, your role in the venture is as significant a contributing factor as the idea itself, and if you do secure the funding you need, you’ll be spending a good deal of time working alongside your investor. Given that, you’ll need to establish a solid and genuine rapport with them, and you won’t achieve that if you’re trying to be something you’re not.
Far too often, aspiring entrepreneurs make the big mistake of drawing too heavily from presentations they’ve seen or business people they idolize, when their unique personalities hugely influence their specific ideas. You need to offer what makes you different, not what makes you the same as the other pitchers they have queued up that day.
So the best thing to do is be as natural as you can (while remaining professional, of course). Be focussed but relaxed, formal but not too strict. Demonstrate the passion you have for the project, because someone who really cares about something can more easily be trusted to work hard to make it a success.
Cater Your Approach to the Specific Investors
If you really want to master your preparation, consider consulting your prospective investors before pitching to them to ask what they look for in a pitch. Not everyone will appreciate that kind of scouting, but many will be impressed that you’re determined to win them over. If they say “5 minutes, tops”, then you’ll probably have an edge over other pitchers if you can actually meet that strict requirement instead of waffling on.
Not sold on that idea? Are you familiar with the phrase “If the mountain will not come to Muhammad, then Muhammad must go to the mountain”? What about “Do not wait to strike till the iron is hot, but make it hot by striking”? Suppose that you were able to get your idea off the ground without learning to reach out for valuable feedback — that lack of understanding would hugely hamper you in your efforts to grow.
You can look to the current ecommerce world for a clear example of this, because the enterprise-level companies don’t always offer mechanical improvements (their products aren’t always better, price margins are tight, and next-day delivery is the same from any store), but they do know how to perfect their services.
To win at high-level online retail, you must use all the resources at your disposal to sell where your customers are, not where you want them to be (there’s a reason why multi-channel ecommerce has become such a vital part of the retail world). Similarly, if you want to not only get investment but turn that investment into a meaningful long-term success, you can’t expect people to meet you halfway. Go to them right off the bat.
Don’t Overstay Your Welcome
How long should a business pitch be? It really depends on the context, the level of investment being requested, and the personalities of all those involved — but it’s generally advisable to keep it as short and punchy as possible. You want to get the potential investors on the hook, then leave them more curious about you, not less.
Also, as overly-theatrical as they can be, there may be value in checking out shows such as Shark Tank for some light inspiration. Which pitchers come across well? Who hits the important points most efficiently? Finally, I recommend listening to stories from successful entrepreneurs who’ve been through the process — they’ll likely resonate with you.
Nailing the business pitch will often prove the biggest key in turning an idea into a reality, so don’t take it lightly. Do your research, show that you know what you’re doing, be natural, and use the limited time you have to maximum effect. Good luck.
Kayleigh Alexandra is a content writer at Microstartups. Microstartups.org is a website by a team of writers and marketers, dedicated to supporting and spreading the word of micro businesses of all shapes and sizes. MicroStartups believes in business growth through giving and supporting the local community.