If you are planning to start a business, you have likely identified an opportunity and validated your startup idea. Now you are ready to start spreading the word about your business. You need to communicate with potential clients, future customers, prospective partners and investors. But how do you do this effectively?
We call this pitching. Getting it right is crucial to getting the financing for your vision. It’s daunting, but there are some things you can do to prepare for it.
General Tips For Startups
There are a number of more general things to be mindful of with a startup. You should:
- Know your purpose as a business.
- Believe in what you are doing.
- Adopt a mindset of always wanting to learn.
- Develop a strong understanding of your customers and work for them.
- Put a lot of effort into planning.
- Try to get an idea of what the future will bring.
- Learn what technologies might be useful for your business.
- Network to gain contacts and advice.
- Develop your negotiation skills.
- Make some decisions about how to market your business.
With these general rules in mind, you will be able to craft a comprehensive and inspiring pitch. Consider this the foundation of what you are setting out to do when you pitch to investors and anyone else. If you would like more tips on starting a business you can read our helpful guide Tips For Starting A Business.
How To Pitch a Business Idea
You need to exhibit certain characteristics in order to inspire investors. They want to see that you have a robust understanding of your:
- Strategy for growth.
- Business plan.
This is what will help you stand out from the competition. You need to show your proof of concept and make others believe in you. Here are some tips for pitching your business idea:
1. Know Who You Are Pitching To
When you accept an investor, money isn’t the only consideration. It’s a partnership, and you need to understand who you are getting into business with. Consider the following questions with every potential investor:
- What industries do they usually invest in?
- Do they usually invest in startups or more established businesses?
- Do they have a good track record?
- What is their reputation?
These questions will help understand whether you could work well together. There is a lot at stake, and there are many benefits to making the right choice. It’s best to know as much as possible about the prospective investor before going into the pitch.
2. Think About How You Come Across
Your ideas and skills are important, but your personality is equally crucial. Perceptions about character and trustworthiness could make or break a potential deal with an investor. They are also interested in entering into partnerships with the correct people. This means they will also take an interest in things like your early startup hires and how open-minded and flexible you are.
Keep this in mind while preparing your pitch. If they have any criticisms, are you going to be defensive? Do you intend to exaggerate any numbers in terms of financial projections? Trust is very important in partnerships so you need to come across in the right way. If you are concerned, try rehearsing some responses ahead of time.
3. Your Presentation Should Be a Story
When you think about describing your idea, you should be focused on the problem you are solving and demonstrate how you do it better than the rest. A good way to do this is to present a real-life scenario that sums up a pain point a customer might face. Then you can demonstrate how your product or service is the solution.
This approach can engage investors on a more personal level. This is a powerful way to inspire. Charts and spreadsheets convey part of what you’re pitching, but it is stories that complete the picture. This could communicate the true potential of your idea.
4. Structure Your Presentation
Your story and the way you come across will set the stage. But the specifics are still important. Start by making your value proposition – a memorable tagline can help with this. After telling your story, cover the details as comprehensively as possible:
- What is the market size?
- How do you plan to attract and retain customers?
- What differentiates you from the competition?
- Is it possible to quickly and cheaply determine product-market fit?
- How will you monetise the business and turn a profit?
- What amount of capital investment do you need?
Generally speaking, investors want to see how you think about the opportunity. Optimism and confident realism are green flags in this scenario.
3 Common Types of Business Pitches to Consider
There are common elements to all strong pitches, but there are different forms of pitch that are better for different scenarios. Consider the right type of pitch for the audience.
1. Elevator Pitches
This is the most popular type of pitch, in which you communicate your startup’s value in under a minute. It needs to be concise, inspiring and a good summing up of your startup’s true value and unique approach. Finish with a call to action, like the amount of capital it needs for launch.
2. Short-form Pitches
This is where you need to present an efficient pitch to prospective investors/clients. Summarise the most important elements and keep your audience’s attention. Highlight market size, key differentiators from competitors and how you will monetise the idea. The amount of financing required should also be included.
Short-form pitches typically last for 3-10 minutes. Consider length restrictions in a competitive setting. These concise pitches can lead to an opportunity to present a more long-form pitch.
3. Long-form Pitches
If you are lucky, you will get an opportunity to take your time to make a pitch. This is where you need to make the most of the time you have. Address every aspect of your startup idea, focusing on the story and moving through details like market size and plans to attract and retain customers. This will show that you are planning for challenges.
You should convey your blueprint for testing product-market fit and go over a detailed monetisation plan. Exit strategy could also be a component of this presentation. In essence, a long-form pitch is the most complete version, and you will not always be able to do it. When you do get an opportunity, make the most of it.
For many, the thought of standing up in front of potential investors is daunting. The majority of us will have seen business pitches getting torn apart on shows like Dragons Den, but in reality, it’s not that scary.
You may get asked some difficult questions, but if you prepare a rock solid pitch in advance and know your business proposal inside out this shouldn’t be a problem. By creating a great business pitch and rehearsing it, there will likely be less questions asked of you.
It’s about being yourself, knowing your business fully and being prepared.