Creative, visionary ideas are the lifeblood of your small business, but adequate funding keeps the doors open. You may find, like 46 percent of small business owners surveyed in the 2014 Small Business Success Study, that commercial loans are easier to obtain than they were in the past, but like many of them, you may wish to seek alternate types of funding, such as assistance from investors.
Investors want to know how much money your business needs to achieve success and when they will get their investment back, according to Holly Magister, founder of ExitPromise. “Being well-prepared to answer these two questions will be critical if seeking outside investors to start a business.”
No matter how innovative your business idea, when approaching an investor for funding, it’s important that you create a professional pitch. Follow these steps for doing so.
1. Highlight yourself.
While investors are considering backing your business idea, they are also deciding whether to put their money behind you. They know that good ideas can only be successfully executed by well-organized, savvy small business owners—so put your best entrepreneurial foot forward by starting the pitch session with an engaging anecdote that introduces you and your business philosophy.
Also share a brief overview of your team so that they see you have all of the key people in place to make the venture successful.
2. Describe your idea in a compelling manner.
Many investors have heard just about everything. Perfect the description of your product or service to make it sound enticing. Describe its value proposition, its unique yet universal appeal.
3. Be clear about your target market.
Saying that your product will appeal to anyone is inaccurate and ineffective. Investors know that few products entice everyone. They want to see that you’ve done your market research and possess a clear idea of your target market. Have statistics at your fingertips as to who will realistically buy your product and how much of it they will likely purchase.
4. Acknowledge your competition.
Few businesses lack competitors, so avoid stating that the playing field is wide open. Be transparent about what’s out there and then objectively compare and contrast your business with your competitors. Doing this shows that your business model and product and services are superior.
5. Share your marketing plan.
Investors know that even the best ideas can go unnoticed without effective marketing behind them. Clearly and completely outline your marketing plan and back it up with statistics on prior marketing plans that did well. Focus on a few tactics that you feel will be especially successful for getting the word out regarding your product.
6. Relay your funding request.
State exactly how much money you seek and detail how those funds will be spent. Also share how much you’ve invested in the business and the idea in particular. Investors want to see that you believe strongly enough in your product or service to put you own money on the table, as well.
Receiving investment funding for your business can give you a financial leg up and provide you with access to valuable advice from seasoned investors. Use these steps to perfect your pitch so you can enjoy the funding you require to make your small business dreams a reality.
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