It was a great question I was faced with: "Can you expand on that? How to properly pitch a business idea." I was speaking at the Missoula Entrepreneurs Club and I was talking about the importance of pitching. I was a bit taken back because I didn't know how to properly answer the question. It's not that I don't know how to pitch but I didn't know how to give a short answer to that question. In the end I ended up telling them the difference between pitching to a banker vs an angel investor. I am by no means an expert on pitching a business idea but here are my thoughts on it.
Know Your Audience
One of the lessons I learned from my Goldman Sachs cohort was understanding who you are pitching to and how that affects your presentation. To keep things simple I want to identify only two sources of funding for your business; a bank or an investor.
If you are pitching to an investor they care more about the vision and the idea rather than the numbers and collateral. If an angel is going to take a chance on you and your business idea then you need to get them onboard with your vision. Tell a compelling story and lock them in, then talk about the numbers. Although an angel investor wants to hear about the vision they still definitely want to know about the numbers. They need to know what is in it for them.
When pitching to a bank they aren't going to care about the vision and the story nearly as much. A banker is going to care about the numbers so make sure you know them inside and out. In reality a bank needs to hit certain criteria in order to give you a loan so avoid the vision because it doesn't matter to them. Additionally a bank is going to want some collateral, so if you don't have any you are wasting your time. If you have a good credit history, some solid financial reports and a favorable financial outlook then a bank is a good option.
When talking to an investor focus on vision, but when talking to a bank focus on numbers. Bottom line is in the end both care about numbers so make sure you know them.
Know Your Numbers
Like I said in the last section you need to know your numbers no matter who you are pitching to. Have you ever watched Shark Tank and seen them grill the person pitching over their numbers? They have the answers ready don't they? You need to know your numbers that well and be ready to give answers quickly without any hesitation.
We often get leads from businesses that are seeking funding, either from a bank or a private investor. Many don't have an investor ready bookkeeping system, meaning they can't produce updated and accurate financial reports. It is astounding to me that anyone would approach a bank or an investor without current financial statements. Do you think anyone is going to give you money without looking at updated financial reports? Would you?
You have to know your numbers inside and out, period!
Tell Your Story
People love a good story and that goes for anyone you are pitching to. Bankers and private investors get pitched to a lot so you want to differentiate yourself. Approaching an investor and telling them you are going to be the next Facebook just isn't going to cut it. You need to be passionate and genuine about your idea. Any investor is going to see right through any fakeness.
A genuine personal story is a must.
Your First 15 Seconds
I can't tell you how crucial your first 15 seconds of pitching are. To be honest I really feel like it is more like 8 seconds. If you haven't grabbed a potential investor's attention within the first 10 seconds I really feel like it is over. Most people will stop listening after 10-15 seconds unless you have grabbed their attention. Therefore, make sure your opening is dialed in and compelling.
The opening to your pitch needs to really grab the attention of your audience. You can get into the details later, but you will never have a chance to do so unless you get them to listen from the beginning.
Practice makes perfect and that goes for pitching as well. Pitch your idea as much as possible. Pitch to your family, your dog, your business network and to yourself in the mirror. Don't even think about having notecards; your pitch needs to be genuine. After enough practice your pitch will be perfectly natural, it won't come off as rehearsed.
Your first 10-15 seconds are crucial; make sure your opening is compelling.
What advice do you have for pitching a small business idea?