One of the biggest hurdles entrepreneurs face is raising capital for their business-both seed or scale-up capital. 13% of failed business owners point to this as one of the reasons their business ran down. Running a business is money intensive. You need more than the little savings in your bank to turn your entrepreneurial dream into a reality. That is why most entrepreneurs lookout for investors who can support their business. Even those who start with no capital seek funding at different stages of their business growth. That is why it is important that you learn how to pitch your business idea to potential investors.
Pitching your business idea to a potential investor can be intense. Having a great idea is good but selling that idea to a third party is a different ball game. It requires a level of mastery of public speaking and the art of persuasion to convince anyone to pull their money into your business. It’s like trying to convince an interview panel that you are the best man for the job. You wonder if you made a good impression, if you answered their questions correctly or if they will hire you.
Before you present a business pitch to an investor, you must prepare adequately for the presentation. That pitch can either make or break that partnership. Here are some useful tips to help make your business pitch a success.
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10 Steps To Follow When Preparing To Pitch Your Business Idea
1. Research Your Investors
Before pitching your business idea, do some research on your potential investors. You must understand who they are, what they do, their business background, and their values. This information will help you to deliver your speech in a manner that appeals to their personality.
Different investors have different interests. Some investors like details while others want to see the sketch, some like big thinkers while others believe in starting small. So, you must fine-tune your pitch towards their interests. A good business pitch combines facts and emotions. Appeal to the investor’s emotions while stating business facts. With this, you will gain their attention and trust.
2. Use A Story To Pitch Your Business Idea
A good and well-structured storyline never goes wrong. Storytelling sells. That is why businesses use stories in their marketing campaigns. Use the first five minutes of your presentation to tell a story that highlights the need for the target market and how your product helps your customers to solve that problem.
A simple story will help them to understand the benefits of your business even if they don’t know the technical aspect. You can even tell a story of how you started your business and the journey so far. This story can ignite their emotions or serve as proof of your results. When they see what you’ve done, they will be convinced that their money won’t go to waste.
3. Nail Elevator Pitch
An elevator pitch is a brief speech that sums up everything you’ve said in your presentation. Your final words should last for just 30-40 seconds. Within this short time, give a summary of your business idea and company goals. Keep it short, simple, and convincing. Your elevator speech is what sets the ball rolling for follow-up questions.
4. Focus On Selling Yourself Not The Business Idea
A good business pitch focuses on projecting the business owner as the best man for the job. Remember, there is no monopoly of ideas. Investors receive investment requests every day. Someone else may have pitched the same idea to them. Don’t be too obsessed with glorifying your idea. Focus on showing them that you are a smart entrepreneur who knows his onions.
Show them your in-depth insight of the market population, your skillfulness in utilizing resources, your understanding of sale projection, and so on. Give them the impression that you are capable of successfully running the business. A good business idea will not succeed under poor leadership and management. Sell yourself as the best capital they need to sail that ship.
5. Use Timelines To Pitch Your Business Idea
A smart business goal should be time-bound. It gives the investors clarity on how you intend to execute the idea. You must state the duration of each phase of execution; planning, market survey, production, marketing, sales, and results. State the activities to be carried out in each phase and the requirements. Also, be clear on what you intend to achieve at each phase. This gives investors the impression that you understand business operations.
6. State Your Funding Needs
After describing your business idea to the investors, the next step is to discuss the financial implication. How much funds do you need to execute that idea? State the total amount required for operations and how you intend to utilize the funds. How much will be spent on production/manufacturing, procurement, marketing, and dispatch? Prove to them that the money they are investing will be used wisely. This will also demonstrate the competence of your team in managing investments.
7. Describe Your Financial Projection
The aim of running a business is to make a profit. As such, your business idea should have a projected revenue stream. This is one crucial element you must not forget. Investors would like to know how your business idea can become profitable. How much is the estimated return on investments? What is your projected profit in the next 3-6 months?
Not all business ideas which solve a problem can be profitable. Investors want to know that your idea is both useful and profitable, as they don’t want to waste their time and money.
8. Dress Professionally
Do you know your physical appearance can influence the decision of your investors? Dressing shabbily to pitch your business idea is a turn-off. Make a deliberate effort to dress formally and confidently. Get a clean haircut, knot your tie, straighten the rumbles on your dress, button your shirt, and look smart. Proper dressing boosts your confidence level and gives a good impression.
9. Prepare To Support Your Claims
After your presentation, expect questions from the prospective investors. You may be required to answer some claims you made during your presentation especially regarding your target clients, market size, financial projections, marketing strategy, structure, and team, etc.
Every claim stated in your pitch should be backed up with an underlying fact. You must defend your claims intelligently as that is your last chance to win them over. Be careful not to ramble or stutter even when they try to throw you off guard with a tough question. No investor would want to invest with someone unsure of himself.
10. Practice Before You Pitch Your Business Idea
Practice they say makes perfect. Even if you know your business idea so well, you still need to practice. Practice your presentation in front of your friends and use their feedback as a guideline to improve. The goal here is to familiarize yourself with the contents of your pitch. This will help you speak well and connect with your potential investors. Research possible pitch questions and prepare answers to them.
Remember, you are pitching your idea to a group of people who are key to the growth of your business. So, you must be at your best. Walk into the room with confidence and be ready to impress them. If you can inspire them to take a chance on you, they will be willing to give you the financial support to build your business.
As you get investors to invest in you, remember that your business needs visibility to scale. So, write to us today to put your business on the world map.