Organising funding for your new business is no easy feat, particularly in South Africa where the economy was already at a weak point before COVID-19 hit us. Luckily for startups and entrepreneurs, consumers are looking to support small, local businesses during these tough times. With consumer interest support heightened, it’s the perfect time to secure that all-important investment to get your business going.
But that doesn’t mean you can set up meetings with potential investors and they’ll come ready to open their wallets to you and your business right off the bat. Pitching your new business idea requires a fair amount of preparation.
Whether you’re pitching to a venture capitalist or private investor, read on for our top five tips for your next business pitch.
1. Understand your audience
Doing a bit of research on the investors you’ll be delivering your business pitch to is vital to set your meeting and potential future up for success. While not all investors will have extensive information about them available to the public, it’s certainly worth the effort.
Not only will you be able to learn their investment habits and how involved they get with the businesses they choose to fund, but also the type of people they are and what would peak their interest.
Your research will help your answer a number of questions that will shape how your pitch is created and presented, including:
- Do they know your industry or will they require a brief history?
- Are they a seasoned investor who will be more cautious or a novice looking for their first partnership?
- Are they a private investor or do they belong to a widespread network?
- Are they a silent investor or do they require a seat at the decision-making table?
- Have they published any content or spoken at any events that give you an idea of how they prefer to do business?
2. Nail your business pitch introduction
Once you have an idea of who you’re talking to, you can create an introduction that highlights your value proposition in a way that resonates with them.
While no introduction is the same, there are a few basics all introductions need to include:
- What your business is: Keep it short and sweet and simply state your business name and what it is that you do.
- What the consumer problem or need is: What gap in the market have you identified? What consumer needs are currently not being met?
- How you solve the problem: This is your value proposition. How will your business solve a consumer’s needs?
- How you separate yourself from your competitors: How is your business more valuable to consumers than your competition. Even the smallest factors can make a difference, like a charity partnership or sustainably produced product.
3. Bring the data
As financial decisions will be made based on your pitch, investors need to see the hard facts. Whether you’ve recently started out or you’ve been going for a couple of years, investors need to see that you know your market and whether a profit can be made.
From your current business costs, to your profit margins, how much you expect to grow in the medium to long-term future as well as how many customers you currently have, investors need to see that you know what you’re talking about and are devoted to making the business work.
4. Outline your revenue model
An extension of your bringing the data is explaining your revenue model. How do you intend to make a profit from your business? It is the crux of how your operation will work.
If you want to sell your products online, do you plan to create a website for your business where consumers purchase on a once-off basis? Or do you have a service offering that brings in cash flow via a subscription service? If you know your data, you’ll be ready for the questions that are sure to come your way.
5. Dress for success
It’s an old saying but it’s one that still rings true. No investor wants to walk in and talk to someone wearing a three day old shirt and ripped jeans. Take the time to put in a little extra effort, nothing overboard (a rented tux is not what you’re aiming for) and you’ll be addressing all the non-verbal queues that come with a first impression.
Stay true to your style, but smarten it up and you’ll not only make a good first impression but also give yourself that extra boost of confidence.
In conclusion, the top tips for how to pitch your business idea are:
- Know who you’re pitching to
- Build a solid value proposition
- Know your data
- Have a clear revenue model
- Dress the part