Article Contributed by Hannah Whittenly
Shows such as Shark Tank have brought the concept of pitching a product or service to investors right into our living rooms. While your next pitch is unlikely to be broadcast on national television, it could still be a significant event for yourself and your business. Let’s take a look at some tactics that may increase the odds of making a successful pitch and getting an investment.
Prove Demand for the Product
Few investors are going to give a company money unless it has a track record of sales. To give yourself the best chance of success, sell your product for at least a year to show that there is interest in it. Showing that there is demand for your product may make your company more appealing as a whole. This may enable you to get better terms from investors such as more money in exchange of less equity.
Showing that there is already demand for a product may also reduce the amount of work an investor may need to put in. The harder an investor has to work to make your company successful, the more equity that they will want in exchange for their time and effort. However, if all an investor needs to do is make a phone call to a connection in the retail space to make a lot of money, you may not have to give up as much.
Get Manufacturing Costs Down
A fiscally healthy company is generally one that can keep its costs in check. Ideally, a company that is seeking investment either has a distribution channel or is close to finding one. Getting connected with a company that has products like a powder feeder can make the manufacturing process more efficient. Efficiency in manufacturing may make it easier to produce a larger number of goods in a shorter period of time, which will keep costs per unit to a minimum.
Know Your Key Figures
When making a pitch to an investor, you should have your key financial and other figures memorized. Ideally, you will know what it costs to make an item, how much it is sold for and what your profit margins are. Potential investors may also want to know about labor costs and other figures that may be relevant to your industry. Not knowing these figures or providing incorrect information may make you look unprepared or simply not good enough of a business owner to partner with.
Know Who You Are
It is important that you understand who you are as a businessperson. It is also important that you know what your company is as a brand. Typically, investors are looking for a quality person to partner with as much as they are looking for a profitable brand to do business with. When making your pitch, be clear about what your vision is for the business and how you plan to get there.
While there is no harm in taking advice if it is given, do not create the impression that you are asking an investor to develop your business plan. Furthermore, do not create the impression that will say whatever an investor wants to hear just to get a deal done. In most cases, it is better to keep looking for investment capital as opposed to partnering with someone who doesn’t share your vision.
When pitching to investors, preparation is key. Be sure to practice your pitch multiple times in front of a mirror or in front of others. That will make it easier to simply tell the investors what they need to hear in a professional and knowledgeable tone. Hopefully, this will increase the odds that an investor will like your pitch and agree to invest.