How To Pitch Your Business To Investors

Many would-be young entrepreneurs face difficulty in securing capital to either start or expand their already established businesses, whether they want to expand internationally, add more products, invest in promotions or other avenues.

Attracting the right capital to enable you to scale up requires selling your business idea to potential investors. Most people, although, may have a superb and fantastic business idea that will do well in the long term, they miss out on certain opportunities to convince the investors.

In this article, you’ll learn about some of the best ways to pitch your business ideas to investors.

Mastering your communication skills

Communication goes beyond just talking. It’s a craft you need to master when you want to speak to investors. The investors are looking at your presentation skills, confidence and good delivery of what you are talking about. You are not there to bombard your investors with too much of the infinitesimal part of your business but the crux of the business.

Good delivery will give the “wow” effect. Turn your pitch into a story. Storytelling is a scientifically proven way to capture a listener’s attention and hold it. Besides, it makes your pitch unforgettable.

Know your financial history

Knowing your financial records and balance sheet is an essential part of pitching. You don’t just need to be the financial controller of the company to know the financial standing of your company. Before pitching to investors, you need to learn basic accounting and the reading of balance sheets. In essence, you must show evidence of your business cash flow. It will help you answer questions appropriately. This will help you make realistic demands on the exact capital you need to inject into the business. Make sure the figures are not outrageous which might suggest that you didn’t do your homework well before the pitch.

The “Whys” of the product and not only the “how”

You should focus on the whys of the business. Here, the investor wants to know why the customers would prefer your product or service to your competitors. Why do you think the money will push your business forward and have a huge return on investment? Why do you think the investor will stand to benefit, looking at the prospect of what you’ve already done based on your past financial records? What is your unique selling proposition?

Know the actual valuation of your business

Some people just predict their own valuation of the company without any reputable firm or organisation doing it for them. This type of thing will lead you into the realm of prediction which must not be done. Don’t just forecast but do so with current and accurate figures of the value of your business. How much it is worth and how much it might worth? If you’re not sure, just don’t say it. Showing some evidential backup sets you out as someone who can be relied upon and credible because you’ve done your market analysis expeditiously.

Sample prototype of your business

You need to show the investors what you’ve done. As it is said, “a picture is worth a thousand words”, so is you demonstrating or showing a sample of your business. How it works or what is it? This makes them see what they are about to invest in whether they’d be ready to invest in your business or not.

Sharpen your negotiation skills

When you’re able to present your business so well, then the next stage of pitching is the negotiation. Most investors would either want a 50/50 stake or equity in your business or 5% or 20%. Now, you need to think very well about the percentage of your business you want to give to the would-be investor. If there are five investors, then each of them will present you with how much money they would like to invest in your company and the percentage of shares they want to gain in your company. ‘If you’re not a skilful negotiator, you might end up giving all your company or business to the investors because they’re smart negotiators.”

For the first part, you might have told the investors how much money you want to acquire from them and what equity or part of the business you’d want to give away.

Some of the investors might have to turn around the company because you may have a business, but you may lack the requisite plan to expand the business. They have to work alongside you to push it forward.

Some may have a business, but not have a brand. The investor might negotiate a share along this line.

Here, you, therefore, need to know what’s really better for the business in the long term. Negotiation is either a win-win or win-lose in this case.

Aim for a win-win where all of you can be satisfied.

Conclusion

Selling your business might seem a very daunting task, nevertheless; mastering the points above and practising well may help you get the capital you are looking for to boost your business to the next level.

Comment and let me know how your business pitch went and whether you got that capital you needed.

I recommend watching BBC’s Dragon’s Den — a very good place to start. Read books and listen to podcasts on how to present a business idea to investors.