• United States
  • Canada
  • United Kingdom
  • Ireland
  • Australia
  • New Zealand
  • South Africa
  • Israel
  • India
  • Pakistan
  • Sri Lanka
  • Bangladesh
  • China
  • Hong Kong
  • Taiwan
  • South Korean
  • Japan
  • Singapore
  • Malaysia
  • Indonesia
  • Philippines
  • Thailand
  • Vietnam
  • Turkey
  • United Arab Emirates
  • Iran
  • Azerbaijan
  • Georgia
  • Iceland
  • Norway
  • Sweden
  • Denmark
  • Finland
  • Netherlands
  • Germany
  • Poland
  • Czech Republic
  • Slovakia
  • Hungary
  • Slovenia
  • Croatia
  • Serbia
  • Romania
  • Bulgaria
  • Greece
  • Lithuania
  • Latvia
  • Estonia
  • Russia
  • Ukraine
  • France
  • Italy
  • Spain
  • Mexico
  • Portugal
  • Brazil

 

Business Pitch - 10 Steps

When constructing your business pitch, make it short, simple and memorable. Remember, the pitch is simply intended to capture the attention of a potential investor (it is not designed to take the place of a sound business plan). Investors hear numerous business proposals daily. They don't have time to read through exhaustive details. Lengthy explanations will not impress investors and may even turn them off. If they don't understand your business concept in a short amount of time, they may presume that customers won't understand it either. First you must capture the investors attention. Only then, at a later time, will you get the opportunity to present your more detailed business plan.

Keep your message crisp and concise by organizing your information in a way that allows investors to process it efficiently - What?, How?, Why? Also, inspire confidence with facts, not fiction. Most investors are looking for low-risk businesses with proven teams - businesses that are as close to guarantees as possible. A company with cash flow, a track record and real world experience, therefore, has a much better chance of attracting investors than a business with simple forecasts. If a functional business is not possible, at least find means to verify your business's viability with real world testing.


When presenting your business proposal in writing, the overall structure should be as follows:

Step 1. What Problem Do You Address?

Your company should help address a problem that is felt by a large number of people. Many business pitches undervalue the persuasive power of restating the problem and the underlying need of the customer. Doing a good job of demonstrating the problem and the need of the customer helps you establish an emotional connection with the audience, and can very often be the difference between a successful and unsuccessful proposal.

Step 2. What is Your Solution?

Now it is time to articulate your solution. How is it an improvement? Outline how it makes customers happy and how it’s better and different to existing products/services in the market. If your product/service isn’t the best in your field, change the frame of reference so that you become the best in your niche. Finally, a description will never be as effective as an actual demo. Barring an actual demo, try to demonstrate your solution using diagrams, photos, video, and other illustrations.

Step 3. Market Size

How big is the market you are targeting, and how is it changing? How much of it can you reasonably capture? Market size matters because most investors want to see that there is large upside potential. The larger the upside, the better. (Just don't over exaggerate or it will give the impression that you don't know your market).

Step 4. Competition

What’s the competition in the marketplace? Who are you competing against? Disclose the main competitors in your space, and don't purposely exclude any. Trying to hide other market participants isn’t the best way to start a relationship with potential investors, and its particularly bad if they know of competitors that you "forget" to mention.

Step 5. What is Your Advantage?

Now its time to identify your big, unfair advantage. Why are you better? Why do you believe you have the advantage in the marketplace relative to your competition? Your market advantage could be based on a superior product or service, your team, your price point, branding, profit margins, intellectual property, etc. If your advantage isn't evident, explain how your product/service stands out in a particular niche or caters to a slightly different demographic or market segment than the competition.

Step 6. What Kind of Traction Are You Seeing?

Explain the current status of your business. Is it simply at the idea stage, or are you operational? If you already have users, this is your chance to show that your product appeals to real people. Do you have any testimonials or customer feedback? If you are operational, what are your sales?

Step 7. Revenue Model

How does the business generate revenue? How do you make money? Examples of revenue models include selling a product or service, advertising (direct, contextual, affiliate), subscriptions, royalties, commissions, etc. When listing revenue sources, its best to keep it to one or two. When you list a large number of sources, generally that tells investors that you have a lack of clear focus.

Step 8. Marketing and Distribution

Even with the best idea in the world, you still need to effectively reach the market that you said you were going to capture. What’s your plan for marketing and distributing your product or service? Explain how you plan to get your message out to potential customers (internet search, social media, TV, radio, print media advertising, direct mail advertising, etc.). When communicating your marketing plan to investors, there are three things you should touch on - volume, cost and conversion. In other words, what is the volume of customers or leads that your marketing plan generates, how much does it cost to get these leads, and what is the conversion rate (how much revenue do you make as a result)?

Now summarize the distribution methods. How is your product or service going to get to the customer? For instance, will you distribute your product or service through a Web site, through the mail, through sales representatives, or through retail? Outline the different companies, people and/or technologies that will be involved in getting your product or service to the customer.

Step 9. Business Team

Who is the team that is going to make the business succeed? Initially, investors are making their biggest investment on your team. It is therefore important to show why they should take you seriously. Include a brief professional bio for each co-founder, focusing on what each person brings to the company. If you have advisors, list them as well.

Step 10. Money and Milestones

Finally, you need to state your financial needs. How much money are you trying to raise? Where you are in the process of raising capital? How are you going to spend the money? How long do you expect the money to last? What kind of return/results do you expect? What are your terms of investment?

How much money do you need?
Ideally, you should ask for just enough capital to get you comfortably to a milestone that raises the value of the company. Then you can raise more money with a higher valuation of your company.

How are you going to spend the money?
Your budget should be based on three areas: running operations, paying staff, and marketing / acquiring customers. Remember to demonstrate that you are fiscally responsible and never ask for a large salary or big-budget perks. Investors are seeking partners who operate their businesses prudently.

How long will the money last?
Don't bite of more than you can chew. Investors are wary of funding overzealous businesses. Before asking for millions of dollars to fund multiple product lines (a recipe that will quickly eat away your capital), start with a single product/service that is manageable. Investors prefer companies with proven, step-and-repeat business models, as opposed to aggressive, potentially money hemorrhaging ideas.

What kind of return do you expect?
Summarize the projected return on investment for investors and/or the end-game for the business. Excite investors about your big picture, but be reasonable. Show investors that you have a grasp on reality with a responsible projection. Base your model on facts, past and present performance data, industry and competitor analyses and a series of well-thought-out, defendable assumptions.

What are your investment terms?
What kind of equity are you prepared to give away? What value do you place on that equity? Careful not to overinflate valuations, or you will scare off investors. In general, a company's value is based on real metrics such as existing sales. For an established business, valuation involves analyzing several years of performance history along with the future outlook (including the economy and the company’s anticipated performance). The more mature the business, the more reliable its historical financial statements will be as a guide to its future performance and the more objective the valuation. Valuation of an earlier-stage businesse, on the other hand, is much more difficult. Quality of management and market prospects are the two primary criteria used to value a new business. Regardless of such criteria, an idea that has not yet been commercialized and has no customers is considered high risk and will garnar a significantly lower valuation when compared to an equal business with a proven track record.




What happens when you've finally found financing or partners, do you stop working on your pitch? The short answer is no. The business pitch isn't just for investors. You will need it to promote your business to numerous other parties - customers, employees, suppliers, unanticipated future partners, etc. Your business proposal is more or less the same message you will use for these other parties, so don't stop practicing and honing your pitch. You never know when you will need it again.