Sources of funding don't always look kindly on start-ups and small businesses, so you've got create an irresistible pitch.
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Starting a business can be one of the most rewarding things you can do in life. However, some things can be daunting, such as approaching investors and sourcing funding. Recent research from Plusnet reveals that 48% of small business owners found raising funds their biggest business challenge.
Trying to raise funding without any experience can feel like a big hurdle, so it’s crucial to read up on it and get as much advice and guidance as you possibly can.
I’ve been fortunate enough to experience the pitch process from both sides of the table – as a startup and as an investor.
To share my experience and advice, I’ve teamed up with Plusnet to be an ambassador for this year’s Plusnet Pioneers campaign: an advice and support programme aimed at helping startup business owners as they build and grow their companies.
Here are my top tips to help get investors to back your business:
Expect to be rejected, and don’t be disheartened
When you first approach investors, expect the answer to be no. Don’t let this dishearten you: your job as an entrepreneur is to go through all the nos until you find your first yes. And each time you get a no, ask for feedback so you can make the next pitch better.
If you go in with that attitude, you’ll find the process less frustrating and you may get to that first Yes quicker than you think.
Show the product
It seems simple, but it helps if you can show the investor a great product or prototype during your pitch. I have sat through so many pitches where no one shows me the product or service that they’re talking about.
It’s a basic fail. So take the product or sample or prototype, make sure it looks sexy, shiny and brilliant and get it out on the table. After all, it is what they will be investing in.
Have a good elevator pitch
At the start of one of my most recent pitches, the owner sat down and said, “our vision is to be the biggest brand in the world for death.” With an opener like that, we couldn’t help but sit forward and listen harder.
It doesn’t have to something as edgy as that, but you want a simple, clear, ambitious and believable articulation of what your business is here to do. The test is you should be able to sum up your idea in a simple sentence your granny would understand.
We much prefer to back a team than an individual. We look for a small group of people that share the same values and vision but bring different skills to the team.
A big driver of our success at innocent drinks was that there were three of us. None of us would have been able to do it by ourselves. Together we made one good business person.
Create an exciting but believable business plan
You will get nowhere with investors if you don’t have a credible business plan that you know inside out. It should be ambitious enough to make an investor believe this could be big, and detailed enough so investors can see you’ve done your homework.
The numbers should tell the story of the business – how many shops will list you, how many units a day they will sell, what it will cost to make and what profit you will make. Don’t just make things up, as they will ask you where the numbers come from.
Richard is an ambassador for this years’ Plusnet Pioneers campaign, an advice and support programme aimed at helping startup business owners as they build and grow their companies.