If you’re like many small business owners, you use your personal savings, startup business credit cards, and small business loans to fund your company. But, sometimes, you need more funding to grow. Knowing how to pitch to investors will help you gain the capital your business needs.
How to pitch to investors
Once you find the right private investors for your small business, you will need to plan for a pitch. It’s essential to have a well-developed strategy for pitching your startup business idea. Show investors the potential for your business’s success.
Your pitch should answer several questions that the investors will have. These points include:
- What products or services will your business offer?
- Who is your target market and how will you attract customers?
- Who will manage the company?
- Do you have facts that support your company will make a profit?
- What is the small business exit strategy for your investors?
To answer these questions, you need to do research. To help investors understand your company, you need to know the ins and out of each aspect of your business from products, to marketing, to your small business budget.
You should also be familiar with the investors. See if the investors are experts in your industry, or if they don’t know much about operating the business. You can shape your pitch depending on the investor’s knowledge of your industry.
Create a business plan
A business plan guides you when pitching to investors. The business plan is an outline of your company. Cover information from the business plan in your pitch.
Include financial projections in the business plan. Projections give the investors an idea of how much profit your company will generate. Show financial and market research to support the projections.
Here are some major parts of a business plan:
- A description of your company
- A market analysis of your industry, target customers, and competitors
- Your products and services
- Your marketing and advertising plans
- Financial projections
- The amount of funding you are requesting
You need to have the business plan in writing. Then, you will pitch your idea to investors with a presentation. Make sure you can answer all questions about your company.
Also, prepare a one page summary of the business plan. Investors can read the summary before meeting with you and reading your entire plan.
Keep your pitch concise
Investors are more likely to pay attention to a shorter pitch. Keep your pitch specific and concise. Cover the major points of your business plan, but leave out smaller, unnecessary details.
Facts and figures
Clear-cut facts will help convince investors to put their money towards your company. The facts help prove you are a low-risk investment. Show the investors the calculations for the probability of your business’s success.
Give investors cash flow projections for your company. Represent the best and worst case scenarios, as well as a middle ground.
If your business is already in operation, you can make projections from past financial statements. If you have not started your company, you can use industry and competitor analyses.
Tell your story
It’s important to show investors more than facts about your business. You also want to connect with investors through your company’s story to inspire interest.
If you are excited about your business, investors are more likely to be excited, too. Give a brief history of your company and the goals you will try to reach.
Practice your pitch
Practice giving your pitch before you meet with the investors. You need to know all the information in your pitch. And, you must be able to deliver the pitch convincingly. The investors should feel confident in you and your business idea when you finish.
Practice your pitch in front of other people. Listen to their feedback and adjust how you present the pitch as necessary.
As you pitch your idea to investors, you also want to sell yourself. Let the investors know your skills and background to convince them your plan will work.
Keep in mind what your investors will gain by investing in your company as you pitch. Assure investors that their investments will turn into profits. Show the need your business will fill for customers to support your potential success.