If at some point in your business, you want to raise funding for a project or raise money for a new business campaign, you’ll have to pitch your business idea to investors for funding.
As a business owner, you will need to know how to pitch, whether to investors of funding, banks for loans or even to potential customers to buy your products.
There are serious business investors out there looking for viable, realistic business plans and ideas to put money in. If your business idea is great, and you want to raise funding, all you need is a killer business pitch that beats all doubts.
If you want some inspiration to boost your chances, here are some tips to help you pitch your business idea to investors;
1. Create an elevator pitch
Take an elevator pitch as a snippet of your business. Although very short and brief, it sums up your business idea in a way that can be understood.
It describes your business, your products/services, why it exists and your unique selling position.
If you have a minute to sell your business, you should be able to tell it in a way that business investors can easily understand your business idea at a glance, and be confident to invest in.
Also Read: Top qualities of a great business plan
Elevator pitch is all about practice. You have to practice talking about your business idea in just few minutes, so as to perfect the why, what and how of your business idea.
2. Show small business idea experience
It is possible to have a business idea in an industry you have never operated in before. In most situations, if you’ve the funds available, then you could start it right away, but that will be at a higher risk.
On the flip side, when it comes to pitching a business idea to investors for funding, they’ll want to be inspired by your knowledge and experience in what you or your management team intend to do with their money.
So to succeed at this, you have to demonstrate confidence and grasps of the business idea. To even make it better, back it up with;
- Business evidence – show evidence of cash flow; a track record with customers; testimonials and any market research you’ve carried out. Investors are likely to fund a company that has evidence of its ability to trade.
- Show your experience – demonstrate that your business is in capable hands with an experienced management team that knows the market or the industry and has experience running or working in similar businesses.
3. Work our realistic forecasts
Don’t overestimate profits or underestimate overheads. Don’t pitch your business idea as a get-rich-quick scheme.
It takes time for businesses to realize steady profits, so don’t pitch your business idea as if you can make a multi-million-dollar revenue in the first month.
Rather, demonstrate realistic revenue forecast and growth, considering any possible outcomes – worse case, expected case, and best case in terms of revenue.
Your forecast should be evidenced based; such as market data, competitor analysis, or external policy factors.
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Ensure to include, and explain clearly the assumptions you’ve made in arriving at your revenue forecasts. This will tell investors what to expect should they put money in your business.
4. Keep start-up costs low
It is a business idea, even if it is an early start up with good prospects, fundraising is not an opportunity to cash out.
Don’t include unrealistic overhead costs when trying to raise funds for a business idea. Investors are not only looking for a great business idea; they’re also look out for a business that will focus on revenue while cutting down costs.
In your pitch, you have to focus on cost control. Avoid awarding management large salaries, and find a way to keep capital expenditure to a minimum.
5. Show Working
Demonstrating that you can deliver on the goods and services you intend to create, would be attractive to would-be investors. Before trying to secure funds for a large operation, show that you can produce on a smaller scale first, or that you can deliver your services to a small number of regular customers.
So you have to ‘show working’ that, you either have a smaller customer base ready to buy your products/services or you already have customers.
Success breeds confidence, and if you’ve shown you can deliver then you’re more likely to secure funding to expand your business further.
There are various sources of funding for start-ups to help you kick start your business idea. If you secured funding, then you maybe go to go, but if you have to pitch to investors, I hope you find this helpful.
You can also look at a guide on how to start a business while employed.