As series ten of Dragons’ Den launched on BBC Entertainment last night, we were reminded once again of the perils of pitching your business.
If you’ve ever tried to secure a bank loan for your business, pitch to an angel investor or venture capitalist, or even tried to convince your uncle to back your venture, you’ll be familiar with the hot seat: Answering questions about the most intricate details of your business – and needing everything at your fingertips, while being grilled.
The good news is that even though pitching can be daunting, there are a few basic rules to getting it right. The even better news is that whether you’re trying to land funding or not, getting your business investor-ready will make your business better, because it will force you to take a closer look at your company.
Here are five key questions to ask yourself before pitching to investors.
1. Who’s on your team?
Your company’s employees are as important as its product or service. Investors know that, but do you? Your team and their skills give your organisation credibility. Show investors the experience, networks and expertise of your team – and evaluate if you’re using the skills at your disposal to full advantage.
2. What do your customers need and are you sure?
It isn’t enough to simply tell your potential investors that there’s a need for your product. Hard facts and real-world examples are needed to prove your hypothesis. Have you done your research? Have you spoken to your potential customers? Thinking they want something and knowing they need it are two very different starting points – and while the one will get funding, the other won’t.
3. How well do you know your competitors?
One of the biggest mistakes many entrepreneurs make is trying to make their business look unique by telling investors they have no competitors. Don’t make this mistake. First assume that investors know more about the market than you think they do.
Telling them there are no competitors when they know there are just makes you look ill-informed and ill-prepared. Even worse though, is leaving investors to conclude there isn’t really much of a market for your business because of a lack of competitors.
There are very few businesses in the world that are genuine first movers with no competitors. Rather highlight who your competitors are and a realistic plan to deal with them. Being specific about the companies you’re up against shows how well you understand the competition. This makes you look smart, prepared, and confident in taking on new challenges.
4. What’s your competitive advantage?
Don’t speak in platitudes. You want to be as specific as possible. Don’t use words that sound good, but can be found on all your competitors’ websites. Remember: It isn’t enough to just tell investors your customer service is better. You need to actively show them what makes your business different. Don’t say “We want to focus on customer service,” everyone does that. Show them exactly what you’ll do that will make you stand out.
5. How do you define your target market?
Are you able to clearly identify the market segment you’re targeting? Can you explain how you’ll reach it? This isn’t only about the market, but who in that market cares about your product. For example, if you’re selling herbal teas, the total tea drinking market isn’t your market segment. Health-conscious herbal tea drinkers are. You also need to discuss consumer preferences, your audience’s growth potential, and the best marketing channels to get your product out there.
Enter our Dragons’ Den competition and win business coaching with Pavlo Phitidis. You can win a high-impact 12-month Business Accelerator programme to the value of R140 000 from Aurik Business Accelerator by entering our online competition, run in association with BBC Entertainment. The prize includes 100 – 120 hours of face-to-face business development support for the competition winner. Click here to enter.
To see an excerpt from last night’s episode, click here.