Personal Finance Business Ideas – You have identified an unmet need and validated your startup idea. Now is the time to talk about your business — to potential customers, prospects and future investors. But how do you effectively communicate the promise of your idea and its potential market impact?
Pitching a business idea is one of the most tedious parts of any entrepreneur’s journey. It’s what gets in the way of your vision and the funding needed to make that vision a reality. Although scary, there are steps you can take to ensure a greater chance of success.
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To make a successful pitch, entrepreneurs must show several characteristics to convince investors to finance their innovative ideas.
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Every entrepreneur needs a sophisticated understanding of his concept, development strategy and overall business plan. This differentiates your business idea from others as it reinforces the necessary steps to make it a reality. The perfect pitch shows investors your proof of concept and instills confidence that they can expect a return on investment.
Showing approachable and confident body language during your pitch has a big impact on whether investors think your idea is valuable. This requires communicating your startup idea with conviction so that others understand its value.
Some entrepreneurs try to get in front of every investor, despite their expertise in the industry or the investment stage of the company. You have to keep in mind that when you accept an investment, it is more than just money. enter into a partnership. You must perform your due diligence and research potential investors before making your offer.
“The best venture capitalists become trusted partners and advisors to the founders and the team,” says Harvard Business School professor William Sahlman in his Entrepreneurship Essentials course. “They help recruit key employees. They introduce the company to potential customers. They help to raise subsequent rounds of capital. In some cases, they indicate that the company they supported is a winner, which helps make this claim true.”
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While your ideas and skills are important, your personality is just as important. According to research published in the Harvard Business Review, venture capitalists’ interest in a startup “was driven less by judgments of the founder’s competence than by perceptions of character and trustworthiness.”
Investors also want to know that they are partnering with the right people. Jennifer Fonstad, co-founder of Aspect Ventures, acknowledges in Entrepreneurship Essentials that her investment firm “finds team dynamics and team very critical.” Investors want to know if the founders have worked together before, if your startup’s first hires have complementary skill sets, and if you’re flexible, open-minded and willing to embrace different perspectives.
Consider this as you prepare your pitch. If investors poke holes in your idea, will you be defensive? When they ask for financial projections, will you exaggerate the numbers? Hopefully your answers are “No”—companies want to work with founders they can trust, who are open to coaching and mentoring—but if you doubt your responses, think about what might be asked of you and practice t -your own answers.
As Sahlman reinforces in Essential Entrepreneurship: “Most savvy investors look at people first and opportunity second. Even when a team is young and inexperienced, an investor relies on it to make the right decisions.”
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When describing your business idea, focus on the problem you are facing and how you can solve it better than the competition. You can do this by presenting a real-life scenario in which you describe the pain point a current or prospective customer faced and how your product or service fixed the problem. This can help investors on a personal level and inspire them to see the potential of your idea.
By supplementing your spreadsheets and charts with a compelling story, you can paint a more complete picture of your startup’s future and market the opportunity more effectively.
While it’s important to set the stage, you also need to cover the specifics. In your pitch deck, briefly define your value proposition and share a memorable description for investors to take away from the meeting. From there, transfer the opportunity and details:
“Usually, investors are trying to determine how entrepreneurs think about the opportunity rather than evaluating their presentation or forecasting skills,” Sahlman tells Entrepreneurship Essentials. “They want an optimistic and confident realism. They do not like projections that are not realistic. They have seen too many companies miss their targets and run into problems.”
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Although you are in the early stages of your business, investors want to know how they will pay in the end. To master your pitch, highlight your exit strategy and available options.
“Investors want to back companies where there are multiple exit options,” Sahlman says. “They want to know how they can turn their investment back into cash that they can give back to their partners.”
While all strong pitches share the fundamentals, there are different types of use depending on the scenario. To increase your chances of success, you need to tailor your pitch to your audience and the time frame available.
This is one of the most popular stadiums. Entrepreneurs use it when they need to communicate the value of their startup in 60 seconds or less. An effective elevator pitch should be concise, persuasive and convey your startup’s value proposition and differentiators. Finally, include a call to action, such as the amount of capital needed to get started.
What Is Business Communication?
Entrepreneurs must demonstrate the value of their business idea to prospective customers and investors in the most effective way possible. This means summarizing the most important elements of your idea in a way that makes them want to hear more. Emphasize the size of the market, how it will create barriers to competition, your plan to monetize the business, and how much funding is needed.
Short format pitches can last from three to 10 minutes. if participating in a competitive environment, note any length requirements. These smaller pitches can pique the interest of investors and give you a chance to make a strong pitch.
Sometimes, entrepreneurs are lucky enough to have more than a few minutes to run their idea. If this opportunity presents itself, it is important to make the most of your time. This is your chance to address every aspect of your business plan. Zero in on your story and share a real scenario. Detail the size of the market to show demand and clear examples of how you will attract and retain customers, particularly in light of competitors. This will show that you are planning for—and facing—future challenges.
You should also have a plan of how you plan to test the product market fit, early results, and a detailed monetization plan. Finally, share your exit strategy and the amount of capital needed to someday achieve that strategy. A long pitch should communicate the business idea clearly and concisely, open the possibility for more questions and attract the interest of investors.
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Consider preparing all three court lengths so you are ready for any occasion. It is important to remain flexible so that you can modify your pitch to fit specific length requirements.
Each investor prioritizes different data and information. However, if you start by choosing the right investor and then aligning their needs with your proposed buying opportunity, value proposition and exit strategy, you have a chance to hit the ground
If you’re interested in learning more about what investors are looking for and how you can create value, explore our four-week course on Entrepreneurship Essentials and our other courses on – entrepreneurship and innovation. Not sure which course is right for you? Download our free course flow chart to determine which one best aligns with your goals.
Lauren Landry is the director of marketing and communications for Harvard Business School. Before joining HBS, he worked at Northeastern University and BostInno, where he wrote nearly 3,500 articles covering technology and early stage education — including HBS’s own publication. When she’s not at HBS, you can find her teaching a digital media class at Emerson College, drinking coffee, or telling someone who’s willing to hear terrible jokes. Are you a founder (startup) looking for funding? You’ve come to the right place! Below you can find an overview of thirteen typical sources of funding for entrepreneurs. Some apply to early-stage startups, while others are more relevant to mature companies with rapid growth. However, all the options should give you a good amount of inspiration for your next funding round!
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Explanation: Do you have your savings? Did I just receive a nice bonus? Why not invest it in your company! However, you don’t necessarily need to invest in cash. If a co-founder or partner invests his or her hours to help you start your business while you work his or her job, that’s also an investment. Or, what about a founder who has an office, machinery or technology license? All these are sources of investment. Temporary non-payment of salary is also an option.
When you choose this funding source: The founders can of course invest in their own company at any time. However, you usually see this happen when the company is just starting out. When a company is founded, in many cases, there is no external income or financing available,