Pitching your small business idea to an investor can seem daunting, and it can seem hard to know what to prepare for. When getting ready for your small business pitch, try to have answers ready for these 6 common questions that investors often ask entrepreneurs:
What is your business all about? (Discuss your company, what you do, why you’re so special – in the shortest possible amount of time).
What will prevent others from doing what you’re doing, or, what’s your competitive advantage?
What are you going to do with the money you raise?
Who’s your target market and why will they buy from you?
What’s your marketing strategy?
What does your venture/management team look like?
Though these are 6 of the most likely questions, every investor will have their own things they want to ask you. You can’t prepare for every question, but getting the basics nailed down will help.
We know that making pitches to potential investors or customers can be nerve-wracking, so here are seven tips to help you get prepared:
Know your numbers. Familiarize yourself with the basics: things like yearly sales (volume and dollar amount), cash flow projection and net worth.
Know your business. You should be able to describe your business model, explain what unique need your small business fills, who your competition is and your marketing and sales plan – to name a few.
Research your potential investor or customer so you can speak accurately to what they’re looking for – and so you know what issues may arise.
Act natural! Pitching your business is certainly something that can feel intimidating. But be professional, friendly and try to relax! Your investors are looking for someone great to work with as well as a great business to invest in.
Practice in front of your business partners, trusted friends or family or even in front of your mirror. This will help you pinpoint strengths or missing pieces, and give you confidence if you need to go “off-script.”
Be concise. You might have five minutes to make a pitch, or you might have 30 seconds. Prepare a few pitches of varying lengths that get the point across and sound compelling.
Put yourself on the other side. If you were being pitched to, what questions would you ask? Make a list of these questions to help you become better prepared.
Approaching venture capital or angel investors is never easy, and getting interest in your small business can be exciting. However, not all investors are created equal. It’s vital to ensure that your potential investor is actually a good fit for your business – and will help rather than hinder.
Here are some things to look for in a potential investor:
Attitude – Do they have a real interest in helping you build a successful company?
Reputation – Research, research, research. What are they like? Who have they helped? What do people think about them?
Experience and education – Can they offer real experience or a strong, relevant education?
Their commitment – How busy are they? Do they actually have time to work with you?
After your potential investor has gotten to know your business, you can ask certain questions to get to know them better. Here are some examples:
What do you think of our business model? What have we missed? What are we doing well?
Have we missed any competitors in our analysis that you think may be a problem for us?
What would you change about the way we’re doing things? Why?
How strong is our team? Who or what are we missing?
How much do you think our company is worth? How much would you be prepared to invest?
These questions will give you insight into your small business from objective third parties. These answers can make a real difference in your business’ future. And don’t feel weird about asking – a good investor will be willing to answer!
Take your time and carefully research their background and track record. Nobody’s expecting you and your investors to be best friends, but there should be good chemistry between you. If there isn’t, keep looking.
If you’ve never developed or given a pitch to a venture capitalist before, you might not be sure what sorts of questions you should prepare for. When getting ready for your small business pitch, try to have answers ready for these five common questions:
Explain to me what your business is all about (your company, what you do, why you’re so special – in the shortest possible amount of time).
What will prevent others from doing what you’re doing – what’s your competitive advantage?
What are you going to do with the money you raise– or how will the money you raise help you achieve your goals?
What’s your marketing strategy– who’s your target market and why will they buy from you?
What does your venture/management team look like?
Though these are five of the most likely questions, every investor will have his or her own set of questions for you. You can’t prepare for every question, but you’ll get so used to pitching your idea that you’ll be ready for anything.
The chance to pitch your small business to a potential investor is exciting and nerve-wracking. It’s a big step towards your small business’ success, and you may be wondering what you need to bring along. Do you bring a laptop to show off your website? Three dozen business cards? No business cards?
Our GoForth Expert Rob Campbell has some advice on what marketing materials you should have on hand when pitching to an investor.