Last week we looked at some tips to avoid entrepreneur’s burnout. This time we would like to focus on raising finance, specifically using the approach that most people refer to as pitching. This is basically a spirited effort to market and sell your business idea or proposition in an effort to obtain funding. I guess you have heard or experienced this already. Haven’t you? The rule of the game is – if you can’t sell you are sold. Don’t you agree with me?
Now, according to Fergal Byrne, ‘Pitching is a highly charged make or break opportunity to create a good impression and capture an investor’s interest…this requires passion, concise pitch to wet investors’ appetite, emphasis on product, problem solution and mastering the domain’. I candidly think that Fergal is expressly right. Being an entrepreneur, there are times when you need to do a pitch. You need to be smart in this, less you simply waste your time.
If you think you have sufficient funding and you don’t need to present your business ideas to anybody for potential funding, then you might not bother with this. However, I know that most entrepreneurs need this. So, what are the things that can make or break your pitch? What are the top tips for pitching your business ideas to convince investors or whoever cares to pull money out of their pocket and invest in your enterprise idea? Let’s take a look.
- Prepare adequately and in time. My dear entrepreneur, my very first tip for your pitch to obtain funding is simply preparation. I wonder whether you have ever had someone try to promote something, may be a business idea or a product or service to you but in a very lazy and unprepared way. I have sometimes had a quiet internal laughter simply because the promoter is so unprepared. I mean so raw like uncooked beans, that you can simply see disorganization. Now, nobody wants to invest in a mess. Take time early enough and prepare adequately. Put yourself in the shoes of the investor. Think. You might get some clue on what an investor needs to be able to part with his or her hard earned money. Do you get me?
- Be honest. Deception will work against you. Be careful. Some lies are so white; so plain that you can’t even see a shade of grey in it. Come one. Don’t cook all kinds of lies simply because you want funding. Pigeons always comeback home to roost. Your lies will catch up with you before you even know it. Be honest, and let the investor vividly see even the struggles and difficulties you have. You know money matters are not as simple, because money speaks the language that everybody understands. I would rather give my money to someone who is honest, and help that entrepreneur through the tough times making the business work, than opt for a liar who will lie more about the inability to repay you your money. Do you understand what I mean? Get me right. I’m not expecting you to be angel with perfect supernatural knowledge of everything. I say, be honest.
- Demonstrate good knowledge of your business and products or services. Another top tip for pitching your business ideas for funding is the demonstration of clear knowledge of your business, products and services etc. One of the very dangerous people to do business with is someone who is very ignorant and yet extremely confident in that ignorance. If you can’t explain to me clearly your enterprise’s products and services, the internal workings of the business, the process flow, how you create and deliver value, the target market etc, why for God’s sake should I invest a dime in that business? Just tell me. Why should I? Come on, Mr. Entrepreneur. You could do better!
- Develop trust. Money and investment are about trust. I mean real money. Not just someone giving you chicken feed. Chicken feed does not do much for a business. I believe you need some good money to invest. Don’t you? So, another top tip for pitching to obtain funding for your enterprise is the element of trust. If you are unwise and appear like you are mistrust itself then you have only yourself to blame. You should develop trust with your potential investors even before they have given you anything. This creates a free and suitable environment for investment. Trust is so cardinal that if your stakeholders, be it investors, the market, your employees etc. don’t trust you; you are indeed set up for a very tough time in your business ventures. Even the tax guys have to trust you if you delay paying up. Isn’t this true?
- Make use of the psychology of pitching. Now, you may blame me for using the word ‘psychology’. I’m not playing in your mind. Neither am I advising you to play in the mind of your financers. Do you understand me? I’m simply talking about passion, enthusiasm, confidence, avoiding desperation, good salesmanship, good impression etc. Get this top tip for pitching right, and you are on your way to obtaining the funding you need for that enterprise. Don’t mind about the psychology some professors teach at the University. You might come out as too serious if you follow those academic guidelines.
- Understand the profile of your potential investors. By the way, the profile of your potential investors is another important factor to consider while pitching your business ideas for funding. This is another top tip in pitching. Different investors have different characteristics, profile, interest, area of focus etc. Don’t sell your synthetic packaging materials investment idea to an environmentalist investor. You will fail before you even introduce yourself. Don’t promote some very risky business idea to an investor who is very conservative in approach. You know your risk taste better than I do.
- Focus on what matters to the investors. Closely connected to my point above regarding understanding the profile of your potential investors, another top tip in pitching your business idea for funding is focusing on what matters to the potential investors. What do your investors, and most investors anyway, want to precisely hear regarding your enterprise management, that specific industry you are investing in, your products, market, market needs you are planning to meet etc.? Mr. Entrepreneur, please understand that most investors know their game. They might know more than you regarding that industry, products, market etc and therefore you don’t need to appear silly to them. Don’t you agree with me? Talk aviation language to an aviation investor. Period. If you can’t for example speak the business language for that industry, you might appear unserious. If you have a grey definition of your market, you might again look like a time waster.
- Be willing to engage and take advice. Occasionally, you might find that interested investors would like to tweak your business idea before they pour in their resources. Never have your business idea and plan cast in stone. Ok? Be flexible and willing to engage, discuss, take advice and modify your plans if required. Their advice could even make your enterprise perform much better than you had originally planned.
I guess I have done justice to the top 8 tips for pitching your business ideas for funding. Haven’t I? And before you give me a terrible response, let me be on my way. Cheers!
The Wise Entrepreneur