Pitch Perfect: How to Effectively Sell Your Business Idea

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One of the best ways to start your journey as an entrepreneur is to create a business idea that you can sell immediately and then hit the ground running. Of course, sometimes the greatest ideas require some investor funding, be it from angel investors, venture capitalists or even your friends and family. This is when cofounders need to perfect the art of the business pitch.

Most people have seen "Shark Tank," where hopeful business owners seek funding from a group of America's most successful entrepreneurs. For every successful product like Squatty Potty and Kodiak Cakes that has made its way out of the shark tank with investor funding, there’s also a small business that’s absolutely eaten alive no matter how good the business idea (see Vestpakz, Gato Cafe and Kymera).

What’s the difference? The pitch. A good pitch is essential to landing potential investors, but what separates an OK pitch from a great pitch?

The Art of a Bad Pitch

To fully understand what makes a good pitch, you must examine why the heck some pitches are so bad. If "Shark Tank" tells us anything, it’s that pitches are often rejected if businesses don’t make enough money, are too niche, there isn’t a clear market need or the person pitching just seems generally untrustworthy. Other rejected pitches just aren’t the sort of thing that need investor funding (like Gato Cafe, a cat cafe that could have taken out a $100,000 business loan instead of asking the sharks for cash). Bad pitches commonly have the same red flags that scare off skittish investors:

  • They omit information about how their team members and cofounders have the unique knowledge and skills that make a business successful.

  • They claim to have no competitors or too many competitors.

  • The main draw of their product is something offered free to customers.

  • Profits are skipped over in favor of social commitment.

  • There’s too much jargon that doesn’t mean anything (seriously, labeling yourself as “disruptive” means little at this point).

  • The target market is too lofty. Investors prefer $1 billion target markets over $10 billion target markets that show a lack of focus.

  • Sales projections are less than 1% of the target market.

  • They trash their competitors. No one likes a negative Nancy.

  • Their gross margin is too low.

  • They valuate their company higher than warranted.

  • They take too long to get to the point.

Great pitches — which have laser focus and detailed, valuable information — help sell great ideas, but it does all come down to one thing: potential profits. Investors are looking to have a healthy return, and it’s not enough to just be profitable. You have to have a pathway to extreme profitability. If your pitch shows that your idea is unlikely to have major profits (or the major profits you claim you’ll have seem too high to be believable), your pitch will be turned down.

Limit Your Business Pitch to a Breezy 10 Minutes

Investors are used to hearing a lot of pitches, and it’s safe to assume that they reject most of them. For every 1,000 pitches investors hear, they’ll only fund about 100. Let’s be real: No one wants to sit through another dreadful, hour-long pitch for something in which he’ll probably never invest. This is why you should limit your pitch to just 10 minutes.

The theory goes like this: If your pitch is good enough, you should be able to explain your idea in a short elevator pitch. If investors are interested, they’ll ask you questions, so it’s best to limit your pitch to only the necessary details.

Stay Focused

Wasting investors' time kills pitches. The more you meander, the more investors are going to look at their watch, tap their feet and stop paying attention. Rambling also makes you look less confident in your idea and less knowledgeable. If you don’t look like you believe in your business, who else would?

Part of staying focused is exactly explaining the whos, whats, whens, wheres and whys_:_

  • What exactly is your product or service?

  • Why exactly would consumers want it, and how is it different from the competition?

  • Who are these consumers?

  • Where are your consumers, and how will you reach them?

  • When will you turn a profit?

Storytelling Is Key

Investors are human, which means they don’t exactly get hyped by parsing through pages and pages of spreadsheets and data. That stuff sells your business after your storytelling. A memorable pitch uses storytelling to humanize a business idea, keep potential investors’ attention and help them feel an emotional connection. The more emotionally invested they are, the more likely they are to invest their money.

What to Include in a Pitch Deck

First, your idea should be good enough that you should be able to briefly explain why somebody would want to invest in your business, but once you get past the door, investors will want to dive much deeper. This is where a pitch deck comes in, which is sometimes shown as a PowerPoint presentation. Most commonly, pitch decks are used by companies seeking angel investor seed funding or series-level venture capitalist funding.

Your slide deck is the perfect place to brush up on your business writing skills. Your pitch should include:

  • Company information: When investors watch this, they should immediately be able to find your company name, logo and contact information. Your phone number (preferably a cellphone) and email address should be readily available.

  • Your concept: This is the elevator pitch. It should be a short mission statement with a powerful image and tagline. This is what generates interest in your overall idea and should be included in your introduction.

  • The problem and solution: The truth is that most startups fail because there is no market need. To prove that the market needs your product, you need to show the problem your startup is solving and how you’re solving it.

  • Target market: Investors need to know there’s a market out there for your product. Clearly define your target audience and the market size. Who are they, what is your marketing strategy and why do these customers need your product? The more credible sources you have, the better.

  • Competition and competitive advantage: Competition is a necessary evil, but you need to show potential investors that you’ve done all the research to fully understand how your business plans to succeed in such a cut-throat environment. What is unique about your company, and what are you doing better than your competition?

  • Your product: Showcase your product in great detail. Outline features and any value propositions. Include lots of high-quality photos.

  • Sales, buzz or visibility: Investors aren’t exactly expecting every investment to be profitable at the time they buy in, but they are expecting to see that you’re on the way there. This is why you need to include information about how your business is gaining traction. This could be anything from sales numbers and growth to social media numbers or reviews.

  • Business model: Investors will want to see a solid business plan that outlines how your business works. You need to have full plans for how your business is going to get customers and eventually generate revenue. What’s your marketing strategy? How will you meet your goals?

  • Financial forecast: It’s a safe bet that investors are going to trudge through your financial information with a fine-tooth comb. This is one of the most important slides of your entire pitch, and you should include information like burn rate, break-even point and number of users required to turn a profit. How much will it cost to get started, and when will you likely become profitable?

  • Investors: Outline who has previously invested. As they say, an anchor investor (the first person to buy in) usually attracts more.

  • How are you using the funds? Let potential investors know how their money will be spent. Is it going to manufacturing costs or customer acquisition?

  • Your team: Investors aren’t just investing in your idea; they’re investing in your whole team. Team members are the ones who have the know-how to take your business to the next level.

Finally, always include a thank you. A little thanks goes a long way. You should also be prepared to answer any questions an investor might have.

Dress Your Best

Yes, you should never judge a book by its cover, but just because you shouldn’t doesn’t mean investors won't. It’s true that people are perceived a certain way based on how they dress, which is why you should dress your best. Never underestimate the power of a tailored suit. Research has shown that shoes are a key part of how we perceive people, and you can actually tell a lot about a person’s personality, age, status and income by their footwear, so maybe skip the sneakers.

Beyond impressing others, research has shown that dressing well also impacts your own thinking. A carefully curated, professional appearance can make you act more confident, more self-assured and in some cases, even more creative. It’s true what they say: Dress for the job you want to have, not the job you do have.

Cater Your Pitch to Your Audience

A pitch deck is not a one-size-fits-all solution. Sure, investors all want the same sort of information, but you’ll be more successful if you tailor your delivery based on whom you’re pitching. For example, a corporate buyer probably cares much more about revenue and numbers because she'll have a larger stake in your company than, say, an angel investor. Angel investors are more interested in innovation and ideas, so this is whom you should really hit with some storytelling.

You also want to evaluate your relationship with whom you’re pitching. Friends and family who already know and love you will probably be receptive if you just ask outright, but a networking contact may find it annoying or rude if you outright ask for a favor. Instead, you should strike up a conversation and try to eventually turn it toward your business after you have already met for the first time.

Rehearse Your Pitch

In order to give the best-possible business pitch, you shouldn’t go in cold. You never know how your nerves are going to affect you in the heat of the moment, so it’s best to be well-rehearsed. You can do this by yourself or test it on a close friend or family member. While you’re practicing, you should:

  • Focus on how you’re saying things: You want to be concise and confident.

  • Focus on your body language: Body language sends a strong message. Practice not hunching and not crossing your arms, which sends signals that you’re either nervous and uncomfortable (this is notoriously self-soothing behavior) or closed off.

  • Keep up the passion: If you sound bored, just imagine how the investors feel. You should always lead with your passion.

You may also want to practice answering some potential questions investors may have. Again, you should prepare answers and have a friend or colleague test you to get you used to answering off the cuff.