You’ve decided to start a business. You even have a completed business plan, so what’s next? Chances are that you’ll need some funding. Before you pitch your idea to investors or the representative at the bank or financial institution, you need to prepare. Any bank or investor is going to be prepared to give you a good mental workout, so it behooves you to be ready. Preparing to pitch a business idea will take a little while, but it will be worth it in the end. Below are some suggestions that can help you get as prepared as possible when pitching your business idea. Follow the 16 steps below. They will guide you on how to pitch a business idea.
1. Prepare to Pitch The Business Idea and Pitch Yourself
When pitching your business idea, you have to prepare both the idea itself and yourself.
Both investors and banks invest first in the entrepreneur, not the business or the business plan.
Therefore, the entrepreneur and the investor have to get along.
It needs to be proven to the investor that you are thoughtful, efficient, and fast.
They need to know that you are able to sustain your project from conception to growth.
This doesn’t mean you have to over promote.
Be natural, professional, knowledgeable, and pleasant.
Answer questions succinctly, but informatively.
Make sure you give them the information they’re looking for regardless of what they ask you.
Most importantly, show them what kind of entrepreneur you are by being confident in your knowledge and abilities.
With this, they can feel good about giving you the money you need.
2. Plan from the Very Beginning
Your business idea pitch needs to show that your plan covers day one of your business till the end of your business.
Investors are interested in everything you’ve got planned, including your exit strategy.
On average, a lot of investors retire after roughly seven years with a certain company.
Afterward, they start to look around for new opportunities.
Therefore, this is a good time to plan your exit strategy.
- Do you plan to sell all of your shares to another entrepreneur or go public with the company?
- Would you like to franchise one day or will you sell your business to some venture capitalists?
You have a lot of options.
Even though you may not have considered what you’d eventually like to do with the business, there is no time like the present to do so.
Make sure you know what your exit strategy is going to be and make sure the investors or bank know about it.
3. Do Your Due Diligence Ahead of Time
For many private investors, it takes approximately three months to do their due diligence on your idea.
When pitching your idea, you need to prepare enough so that they don’t consider it a waste of their time.
You need to make sure you have done your due diligence.
You need to have enough copies of your business plan and other documents to give to each person on their team.
Make sure you are familiar enough with all of the information you’re sharing with them so you can answer any questions they may have.
In fact, spending several months on the presentation is always a good idea, the last thing you want is to be asked a question and be unaware of the answer.
Be as prepared as possible for the day when you meet with these people.
There is no such thing as being too prepared to pitch your business idea.
4. Learn the Terminology
This is easier than it sounds because you can familiarize yourself with any industry’s lingo with just one trip to the internet.
You certainly don’t want the investors you are pitching to ask you a question that you don’t understand, just because they’ve used a word you aren’t familiar with.
5. Make Sure the Fundamentals Are Well Represented
When pitching your business idea, take your time, but don’t include any information that isn’t relevant.
Make sure the fundamental areas are covered and well represented.
Aim to explain in a short amount of time:
- the project
- the growth strategy and
- the return on investment (ROI)
This will go a long way in impressing the investors or the bank.
Most investors and bank representatives will allow for enough time for you to get in all of the essentials, but you still don’t want to rattle on for too long.
Make sure you are at least familiar with the basics of what your business will do.
6. Make Sure You Know What the Investor Is All About
Your investor is going to study you and you should also study your investor.
You might easily find out a lot of information on them by searching online.
Find out if they have invested in the past and how successful they’ve been.
Do they know your industry well?
Most importantly, how much time are they going to devote to both you and your idea?
You should plan to devote a lot of time researching them.
The information you uncover should contribute to how you pitch your business idea to the investor(s).
7. Be Prepared with Certain Documents
You should always have presentations and professional documents on hand to give to each member of the investment team.
You can have a visual presentation if you like.
A combination of documents and a professional verbal presentation will work wonders on any type of investor.
At a minimum, this should include the following:
- A visual presentation of your business plan, although it should be limited to 20 slides or less.
- A written documentation of your visual presentation, reduced to a brief of no more than two pages.
- Your complete business plan, but try to keep it to 50 pages or less.
- An elevator pitch that lasts only five minutes.
Incorporate the items above when pitching your business idea.
It will help portray you as a knowledgeable, professional individual who takes the desire to own a business someday seriously.
8. Portray Confidence by Using Facts
When you’re developing your presentations, documents, or even what you plan to say to the investors, use facts.
Potential investors want to see that your business idea pitch contains facts that can be backed up by real data.
Make sure your documents and presentations have no fluff or vague ideas in them.
Remember, you’re going to be asked a lot of questions and you’ll want to have appropriate answers for them.
These answers need to include facts.
9. Don’t Be Unrealistic with Your Numbers
Your business plan is going to be reviewed thoroughly by your investors, so the numbers used have to be as close as possible to what you’ll actually be spending on these items.
With your marketing and operations budgets, in particular, be realistic with the financial data that you include.
You can give yourself a little wiggle room, but don’t go overboard with the numbers.
If you include a large salary and a lot of expensive perks in your business plan, the investors are not likely to say “yes.”
The numbers have to be realistic.
Investors should get excited about your business proposition, but they should never be inundated with unrealistic expectations.
If you tell them your business will grow from $250,000 to $100 million in just three years they likely won’t believe you.
Worse, they won’t believe that you have done your homework and researched your numbers.
If possible, consider showing three different versions of your financial projects: the best case, moderate case, and worst case scenario.
Most importantly, base everything on facts.
Analyse based on the industry and your competitors, defendable assumptions, and performance data, both past and present.
Be positive, but realistic, about your financial projections and you are more likely to impress the investors.
10. Give Yourself Some Time
Rome wasn’t built in a day and neither will your business.
Investors and banks do not want to fund over-eager businesses that seem to be biting off more than they can chew.
Instead, when pitching your business idea, demonstrate how you’re going to start out by creating and managing just one product at a time.
Let them know you’re planning to crawl before you can walk, and make sure they know you can fulfill the demand for your very first product.
Make sure your sales strategies, operations procedures, and marketing goals are top notch and perfect.
Investors like it when they work with companies proving they will have long-lasting step-and-repeat business models that are almost certain to grow exponentially.
If you look at most large successful companies, you’ll realize that most of them started with just one product.
11. Don’t Act Like You Know Everything
Although you want to present a knowledgeable image at all times, this is not the same as being a smart aleck.
When pitching a business idea don’t try to be the smartest person in the room.
Investors are turned off by this type of attitude.
Instead, make sure you have knowledgeable people you intend to work with who have experience in different areas.
The smartest leaders are people who surround themselves with people who are even smarter.
Make sure the investors know that you intend to rely on people who each have their own talents and expertise.
Keep in mind that investors are just as interested in your management team as they are in the business itself.
Always keep yourself humble.
12. Remember That Less Is Sometimes More
When pitching your business idea, make sure the presentation isn’t too wordy or drawn out.
If it is too lengthy or verbose, investors are likely to be turned off by the entire presentation.
When writing your presentation, keep it short and to the point.
If investors do not understand the gist of your business in only a short period of time, it could be that prospective customer may also find it difficult to grasp.
Investors know this, which is why you need to work hard on your verbal presentation.
Your business idea pitch should be too long or difficult to understand.
13. Study Other People’s Business Idea Pitches
Just like playing a sport or a musical instrument, pitching a business idea takes practice.
Do some research and try and get some inspiration from other people’s business idea pitches.
You will get some tips for pitching a business idea from the research.
Studying other people’s business idea pitches will give you a flavor of what works and what does not work.
From your research of business idea pitches, you will find out that the best presentations usually have these characteristics: They
- Are succinct and to the point.
- Tell a very good story.
- Balance both emotional and business needs.
- Always focus on the proposed business’s benefits.
14. Make Sure Your Entire Presentation Is Professional and Pleasant to Watch
Just because this is a business idea pitch doesn’t mean it has to be boring.
With your documents and with your visual presentations, they should be well written, attractive, colorful, and pleasant to look at.
There’s also nothing wrong with adding a little humor to your presentation, although it should be kept to a minimum.
Make your visual presentations filled with graphics that catch people’s attention.
Roughly 65% of communication is nonverbal.
Create and recreate if you have to in order to get a presentation that is perfect in the end.
This is what it’ll take to get investors over on your side.
15. Current Customers or Investors Will Enhance Your Business Idea Pitch
If you have already started your business and have a few customers or another investor, make sure your prospective investors know this.
If another company or bank has already invested money with you, this is a good sign to prospective investors because it means another investor is already taking you seriously.
This, in turn, increases the odds that they’ll take you seriously as well.
When pitching your business idea, share this information with the bank or investment company.
It is going to be a very valuable detail.
16. Make Sure the Beginning and the End Are Phenomenal
The first several minutes and the last several minutes of your presentation should be dramatic and memorable.
Most investors agree that potential investors usually decide within the first minute or two if they are going to say “yes” or “no,”.
Make sure you bring your A-game out in the very beginning.
This isn’t to say the middle section can be drab or mundane, but it is crucial that you catch the investors’ attention in the first and last few minutes of the presentation.
You’ll want to make a point, keep their attention, and tell them what you want them to know before they make this all-important decision.
Use your experience and knowledge, along with your personality, to get the job done.
Act on the 16 steps listed above on how to pitch a business idea.
Stand in front of a mirror and try out the presentation there, including handing out documents to the investors or bank representatives and getting through the presentation itself.
With some practice, your business idea pitch will become a lot easier to deliver, and once you get it polished and perfected, you’ll feel a lot more relaxed about your upcoming meeting with the investors.
Are you ready?
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