In the current market it can be difficult to be accepted for a small business loan because many banks have tightened their lending policies. However, this is not your only option for financing your business. You can get the capital you need from private investors if you know how to pitch your idea to them. Beyond demonstrating that you possess extensive industry knowledge and are experienced in the field, here are some tips to help impress prospective investors:
1. Show Your Passion
While prospective investors want to know your connection to the prospects, they really want to see how passionate you are about your proposal. As part of your elevator pitch, show potential investors your plans and work that has already been completed, such as a responsive design site on that latest Samsung Galaxy S 6 smartphone.
Now that you have their interest, chances are they’ll want to dig a little deeper to uncover what drives you each day to pursue this venture. Use a tone of confidence when describing your company, but don’t be too overbearing or arrogant as this takes the attention off of what you’re presenting.
2. Present a Unique Idea
In a nutshell, you need to show what distinguishes you from others in your industry. Show what issues you aim to resolve that others in the industry haven’t yet addressed. This should immediately follow the introduction of your company to keep prospective investors stimulated. If you don’t show how your idea is unique, you run the risk of losing investors’s interest because an existing product or service already has a substantial share of the market.
3. Draft Your Business Blueprint
Similar to the document architects draft before a construction project, you need to provide a business blueprint to prospective investors. Your business plan should have a list of objectives and actions to make those happen as well as a plan for long-term growth.
If you don’t yet have a business plan, you should include a detailed marketing plan that outlines how you will increase exposure for your brand. Also don’t forget a list of personnel, job descriptions and why each individual is best suited for that role. All of these parts show that you are serious about your business proposal. Inc. explains that “an idea can look great on paper, but if it doesn’t have a great team backing it up, it can still fail pretty easily.”
4. Compile Detailed Financial Statements
Although passion plays a significant role in your pitch, it doesn’t eliminate the significance of healthy profit margins. Investors aren’t looking to just support your company, but rather want to make their money back. Therefore, you should be prepared to hand over financial statements along with proof of your contributions to the company. Also, consider including sales trends and realistic financial projections to illustrate your plans for expansion. Most importantly, disclose the precise way and timeframe in which they should expect to see returns on their investment.
5. Plan for Risk Mitigation
Although the entrepreneurial journey is filled with rewards, you shouldn’t overlook significant risk factors that can harm your business. When drafting up your presentation, don’t forget to prepare for the questions regarding threats to your business and your plans to overcome them. A SWOT analysis, which represents strengths, weaknesses, opportunities and threats, may serve as a good starting point.