Pitching business ideas is one of the most important things that you will need to do as you prepare to start a new business. It can be both intimidating and nerve-wracking.
The biggest problem with pitching a business idea is that there are many distractions that have nothing to do with the business that can easily affect the outcome of the pitch.
The way you look, your mannerisms, your attitude, the way you answer questions, how confident you are, and so forth, are all things that can influence investors` decisions. So consequently your preparation for a pitch has to be more than just about explaining what your business is all about.
I have therefore put together a few points that you may wish to look at as part of your preparation for your big day before potential investors.
You have to look the part
The way you present yourself may sway the investors in your favor from the word go. Why is it important to look good when you stand before potential investors?
Well, the thing is that a well-presented individual is given the benefit of the doubt. In other words, people who look at you will automatically assume that you are a professional individual and in most cases that is true.
A person that cares about little things such as how they look is likely to be just as focused when it comes to big things.
More so, investors will appreciate the fact that you respect them enough to want to look good for them. One thing that you want when you stand before potential investors before you even open your mouth, is for them to like you.
And the way you present yourself can make them like or dislike you. If they like you, they will make your life a lot easier, and they will help you to bring out all the information that they need to know.
Remember that investors know that it is very difficult to stand before people and explain your business and answer questions. So they will be willing to help you and if they like you, that help can become very apparent to you.
If you suddenly see them smiling at you, nodding with approval, and staring at you admiringly, that gives you more confidence to really express yourself and forget the pressure. So it is crucial that you take the time to dress appropriately for the investors that you intend to approach.
Know your business
One of the problems with aspiring entrepreneurs is they don’t really know how their businesses work. You need to understand that after you explain your business to investors, they will want to ask you questions about your business.
There is no way you will be able to explain everything that they need to know and then have them satisfied that they know everything about your business. In fact, investors tend to learn more about business during the question and answer session.
That is because they can get to ask targeted questions that focus on the things most important to them. So while your pitch gives them an overview of your business, it is your answers to their questions that are most beneficial to them.
Know your figures.
You may not be an accountant but you must understand what a profit and loss statement looks like and you should be able to read and understand it. Learn the terms in your financial statements.
You should be able to answer the following questions;
What gross your profit?
What is your Turnover?
Know what cash flow is, and the difference between cash flow and profit.
What is your gross profit margin?
What is your breakeven point?
You should also prepare financial projections for the next three years and know the key points in those projections.
Show them the money
Investors are only interested in how they will make money from investing in your business. Therefore those are the issues that you should focus on.
They don’t really care about all the other things you may say in your pitch. Just focus on explaining how you will make money and how much.
Why you want the money
Another very crucial issue that investors are going to be very interested in is what you are going to do with the money that they will give you. Never stand before an investor to ask for money without knowing what you want to do with that money.
Trust me, this is always a question that they will ask. So you must prepare to give a good, credible answer that they can accept. Never approach an investor to ask for money to finance salaries.
They will dismiss you quicker than you can say; `can I have some money`. The money that you ask for has to be entirely for business purposes only.
The last thing investors want is a person who is stingy with the truth. Do not try to pull the wool over their faces about your business. Be totally honest. If they want to invest then they will, and if not then so be it.
You can always approach others. But never mislead anyone in order to get funding. You could also find yourself in law courts if they find out that you took their money on falsehood.
If you have made some assumptions in arriving at your financial projections then you need to be able to explain what those assumptions are and why you made them.
Be clear and honest about the risks involved in the business. This is one area that aspiring entrepreneurs get very wrong.
They try to pitch a business while giving the impression that it is risk-proof. Let me tell you something, investors have been in the game a lot longer than you have been in business. They see thousands of businesses pitched to them each year and so they know a thing or two about risk.
They probably know more about the risks associated with your business than you do. So don’t try to tell them that they will never lose their money if they invest in you or that your business is a sure thing.
There is no such thing as a sure thing. Not in business anyway.
Be confident when you stand before investors. I know that it is not easy but you have to try your best to show them that you are not afraid. Being afraid will not bring you any sympathy from investors.
They want to know that if they give you the money you are confident enough to go out there and bring back the money with more on top.
DON’T BE ARROGANT
It one thing being confident and quite another to be arrogant. Arrogance is the enemy and it can leave you with without investment even if your business is quite sound. Nobody wants to work with an arrogant jerk.
So keep your attitude in check especially when you are answering questions. Frustration can easily creep in under cross-examination from investors.
You must understand that they need to be as sure as they can possibly be before they part with their hard earned cash and so they need to ask awkward and sometimes intrusive questions.
Some questions may even be too personal for your liking but never take it personally. Keeping calm and objective under a barrage of tough questions can win you many friends during a pitch.
Be on time
This may seem a silly one to include here but you will be amazed at how many people arrive late to pitch investors.
Again that will not win you many friends and may lose your potential investment. Be professional and arrive 20 minutes early, have a drink of water while you wait and do your breathing exercises.