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Out of the Shark Tank & Into the Elevator (Pitch)
If you have seen the ABC Television show “Shark Tank,” you can picture the scene. An enthusiastic, passionate, entrepreneur is about to pitch his product to the panel of uber-successful investors, hoping to land that desperately needed funding to launch his business to the next level. With 22 million self-employed people in the United States, there are bound to be a fair number hoping for that big chance.
You’re nervous for the person as he or she steps up onto the stage and begins their pitch. This is the make-or-break moment for this entrepreneur. Millions of dollars are riding on how well they can present their business and interest the investors. Could you imagine yourself up there delivering a pitch? Some show participants nail it and walk away with huge business deals and others fall flat on their faces. Which one would you be?
The elevator pitch, so named because it should not be any longer than the average elevator ride, is an important part of your business strategy. This 60-90-second synopsis of your business concept is meant to grab the genuine interest of your audience. Most people have an attention span of only 30 seconds, so you need to be concise, intriguing, and get the facts across quickly.
For most business people, the elevator pitch will be used for gaining investors and clients. For startups, investors are probably the number-one audience. It can be very difficult to get the attention of investors to even get the chance to give your elevator pitch. Entrepreneur Chris Dixon of Kickstarter, Foursquare, and Skype fame, suggests that you get involved in the startup community before you even start pitching. By participating in online discussions, blogging, and being out there in the startup community, you develop a presence that will get you noticed by investors.
THE WINDUP
Now that you have been noticed, are you ready for the pitch?
The elevator pitch is not meant to be a comprehensive business plan. Don’t cram your pitch so full of superfluous numbers that investors become glassy-eyed and tune out. Also refrain from using too much technical terminology. You might think you sound smart, but smart investors know that people who don’t know their business very well hide behind big words. You are trying to get them to invest, not give them a dissertation.
But just because you have only 60 seconds, don’t think that you don’t need to know your numbers. If you don’t know or can’t convey how many people might buy your product/use your service, then why would someone want to give you money? This means you do need to have a comprehensive business plan in the wings. The elevator pitch should answer certain questions that will have investors wanting to see your full business plan.
Investors are going to want to know what your idea is. Is it a new idea? An improvement on an existing product/service? Tell them why you came up with this idea. This can be done as a (short) story or turn it into your hook. For example, “X” happened to me so I came up with “Y” to solve it. This is what really grabs the attention of the investor.
Next you need to let them know what is the status of your idea. Are you already in business? Are you a startup with nothing more than a dream? Even if you haven’t launched your business yet, you can still deliver a pitch. If you have done your homework and know your market, investors won’t run from an untried idea.
Speaking of the market, this is a very important area to cover in your pitch. You need to show an understanding of the market and where you fit in. What do you believe to be your advantage in the market in relation to competitors and market needs? Have you developed/improved on a product that fills this need better than what is currently available? Who is your competition and how well are they doing? If you know that they investor you are pitching uses one of your competitor’s product/services, what are you doing better than they that would want the investor to switch to you?
You should include your revenue model in your pitch. Are you planning a retail, wholesale, or e-commerce type of business?
It is very important to let investors know who is on your business team. Let them know if you have any experts from the industry or the business world working with you, especially if someone joined your ranks from the competition. Even if you are all new at this, highlight strengths of each member. This will give them more confidence in your idea.
Lastly, investors want to know about what interests them most. The money.
How much money are you seeking? Are you expecting to get all of the money up front or do you have it set up in phases as the business develops? How are investors to be compensated for their investment? Are they acquiring equity or some other means of repayment?
Investors want to know that you have thought into the future and know if there is an exit strategy. Have you come up with profitability projections? When do you expect the company to reach profitability and how much? Are your goals to sell the company to a bigger entity once you are up and running? How long do you expect that to take?
Once you have the answers to all of these questions you are ready to organize it and get that pitch ready.
Pitchspring.com offers the following elevator pitch worksheet on its website. It helps you logically and briefly identify and answer the key elements in your pitch. Once you answer the questions, it puts them into a format that, with just a little tweaking to make sentences flow better, becomes your elevator pitch. You can also record your answers and the site will help you to make a pitch video. If you just need a little guidance, just answer the questions and use those answers to work through your own pitch.
ELEMENTS OF A PITCH
An elevator pitch should contain the following key elements:
1. An attention-grabbing 160 character Bitesize summary
Start your pitch with a statement or question that makes your listener want to hear more. Think about this opening line as you continue this exercise, but write this line last. It should be both an introduction and a summary.
2. A brief description of your product or service and it’s market
Briefly describe what you sell, who will buy it and the channels you use. Explain how your product or service will solve a problem, meet an umet need, or exploit an opportunity. Remember, you want avoid to talking about the features of your product or service and instead you should focus on its benefits.
3. A description of the team behind the business
Provide a little detail about your background and your team’s strengths and suitability for the venture.
4. The benefits of investing in your business
Why would the investor want to take a risk with you? What are the benefits? Succiently communicate how you and your business are innovative and have an advantage over the competition.
5. Delivery
Show the uniqueness of your concept and your passion through the enthusiastic delivery of your elevator pitch. How can you sell yourself as entrepreneur to the investor?
6. A call to action
Finish your pitch with a call to action, what do you want from your investors – don’t talk terms just establish what you need or want.
Now that your pitch is perfect, start practicing. You need to memorize it and become comfortable with it so that you can present it at a moment’s notice. You never know when you are going to be in the elevator with your dream investor, or as some lucky entrepreneurs got to do, pitch their business ideas to Sir Richard Branson on a bicycling ride through South Africa. You need to know your facts and be ready to answer questions regarding the smallest details of your company.
Be sure to practice your delivery so that you don’t sound like a recording. Have passion and enthusiasm, but not so much that you scare investors. Practice in front of a mirror. Videotape your practice so you can view yourself to see if you sound natural and relaxed. Once you have practiced enough by yourself, recruit your family, friends, and willing colleagues to practice in front of. Ask for feedback and modify your pitch accordingly.
Good luck. And don’t let the shark bite!