From the Tank to the Bank: 6 Tips for a Winning Entrepreneurial Pitch [+ downloadable infographic]
No matter how seasoned an entrepreneur you are, the investor pitch is unsettling and even the most experienced presenters will have a blend of nerves and excitement in a room full of investors. This is especially true for first time entrepreneurs who may be starting their first serious venture.
This fall, I had the opportunity to serve as a panelist on a mock Shark Tank-style panel at the University of Utah’s David Eccles School of Business for the third consecutive year. Every year, I’m nothing short of amazed by how innovative these students are, and their ability to think critically and optimistically gives me hope for the next generation of market transformers and disrupters.
Every year, there are a few pieces of advice we inevitably give to most entrepreneurs as we listen to their pitches and decide if we’d invest heavily in their ideas. These same sage tips often are top of mind for our early-stage clients as well.
Market segmentation, market segmentation, market segmentation!
One of the keys to early entrepreneurial success is understanding your market inside and out. Market segmentation isn't just a buzzword; it's a critical factor that impacts your financials, marketing strategies, sales efforts, and even your product development pipeline. Identify your target audience, their needs, their preferences, and garner feedback, consistently. Tailor your business approach accordingly, and you'll be better equipped to capture a loyal customer base.
Remember, if you’re talking to everyone, you’re talking to no one. You can grow and add market segments as you go, but without that initial buy-in from a loyal customer base you won’t have a leg to stand on. Investors want to see that you have a clear understanding of your proposed market and understand the value of tailored messaging. I can’t tell you how many pitch decks I’ve seen through the years that claim value for “everyone;” seasoned entrepreneurs know that while this optimism will motivate you, it’s ultimately unrealistic and could waste their invested resources down the line. So, segment your market, know your market, solve for your market.
Pricing: Know your costs, margin, and value
Pricing can make or break your business. While there are multiple pricing strategies, first be clear on your Cost of Goods Sold (COGS) (and yes this applies to your service product too); calculate your margin, and have clear definition of the value of your product or service for your customers (remember, your customers are a targeted segment of a greater market). Pricing should reflect the quality and uniqueness of what you offer while also ensuring profitability. Pricing strategy is ultimately what turns your dreams into a reality – if your idea doesn’t make money, it can’t recoup investments. Failure to understand your pricing strategy early on (and even when you do, we promise there will be some changes along the way) and effectively communicate costs, margin, and value to potential investors will cause immediate skepticism.
Don’t let perfection get in the way of excellence here – be confident when communicating pricing strategy and results and have a plan for pivoting if you’re asked follow-up questions. You don’t have to have everything perfect in an investor pitch, you just have to be prepared, confident, and an effective communicator.
Simplify the complex
In the world of entrepreneurship, simplicity is your ally. Complex business models and processes can lead to confusion and inefficiency. Strive to simplify your operations, your value propositions, and your messaging. A clear and straightforward approach not only benefits your customers, but also makes it easier for your team to execute your vision – a combination that potential investors are seeking.
Have confidence in your pitch
Confidence is a bedrock of successful entrepreneurship. Whether you're presenting to investors, pitching to potential clients, or promoting your business, self-assurance is key. Believe in your idea, your team, and your ability to grow, and others are more likely to follow your lead.
This does not mean be egotistical or unwilling to pivot. Most investors are actually investing in YOU and your team, not just your ideas. They want to see confidence that can build strategic relationships and foster buy-in, but they also need you to be willing to learn from failure. Bonus points are often added if you can speak to previous failures, learnings, and implementation of those learnings. You should be ready to fall flat on your face with your first entrepreneurial idea, but get back up and turn that experience into the next-big-thing: padded sidewalks! 😉
Ensure product-market fit
Remember that confidence doesn’t replace research. Before going all-in, ensure that your product or service aligns with the needs of your target market. Continuous market research and customer feedback are vital to fine-tuning your offering. A strong product-market fit can be the difference between success and failure. What user research have you done or do you plan to do? Do you already believe in listening to your market and your customers or do you think you have it all figured out on your own? Be wary of blinders.
Realistic timeline
Many startups fall into the trap of assuming high sales and low costs too quickly. It's important to be realistic about your projections timeline. Building a sustainable business takes time, and it's essential to balance your revenue expectations with your expenditures, including- but not limited to - team growth, regulatory hurdles, beta learnings, production surprises, the pricing strategy we spoke to earlier, and making sure you have enough marketing air cover and effective sales. A well-considered financial plan will help you weather the initial challenges and pave the way for long-term success.
