After the age of twelve, when we’ve finally secured an allowance from our parents, most of us try to avoid asking for money. It’s awkward. But unfortunately, for most entrepreneurs (apart from those who have won the lottery or received a hefty endowment) it’s also unavoidable.
If you’re looking to start a business, there will come a time quite soon when you’ll have to make a pitch to potential investors. The success of this pitch will determine whether or not you receive funding and can move forward with your business.
So needless to say, you best be prepared. Even the most eloquent of speakers can stumble under the pressure of the situation or a tricky question. But by anticipating what you’ll be asked and rehearsing your responses, you can avoid costly slip-ups.
Here is a list of 5 topics you should be ready to discuss:
1. Past Achievements
The first thing you want to do in your conversation with investors is establish your credibility. There’s no sense in discussing the merits of your product or the need for your service if you can’t convince investors you’re capable of running a business.
Merely mentioning you went to Harvard or interned briefly with IBM isn’t enough to ensure them of this (they’re parting with major dollars here). Be ready to relate what specific experiences you’ve had that have prepared you for your current venture, what deals you’ve negotiated for former employers and the projects of which you’ve been a part.
As Jane Porter states in her recent article for Entrepreneur, investors want measurable results. So rather than say you contributed to the success of your previous employer, explain that you helped boost their sales revenue by 15%.
2. Target Market
A solid product isn’t enough to ensure business success. You need to be able to sell it. By clearly defining your target market, you assure investors you’ve given thought to this end goal.
Before your pitch, do extensive research on this market. Pin down not only the general characteristics of your targeted buyer (age, gender, industry, etc.) but how you intend to reach this person. Will you rely primarily on inbound or outbound marketing channels and which specifically?
In discussing your target market, you’ll also need to prove they are in need of your product. Be able to explain to your potential investors what it is about this market that makes them a good match for your product.
Perhaps surveys suggest there are a large proportion of single, working mothers in your town. Thus, your day care service will surely meet a need. Bring these surveys to the pitch. Again, provide as concrete of evidence as possible (research, surveys, first-hand experiences) to convince your investors.
Demonstrating interest in your product isn’t enough. You need to prove the existence of a need for this product. If 4 successful day cares already exist in your town of 10,000, your business very likely won’t take off.
Make sure you have a thorough understanding of all your competitors before going into a meeting with investors. Be prepared to discuss your business’ competitive advantage in relation to them—what do you offer that they don’t?
5. Financial Need
Obviously you need funding (why else would you be making a pitch?). But make sure your investors know just how much you need their support. Be specific when discussing what their specific contributions will allow you to do.
Will you be using their funds to hire employees? To improve your product or stock up on inventory? The more you can tell them about how exactly their money will be used, the more inclined they’ll be to give. Discussing your specific plans makes them feel a part of your business.
For other advice on how to secure funding (and how to manage once you’ve got it) contact our start-up accounting and CFO services experts.