3.1 What to cover in your pitch
There are many things you may want to cover in your pitch: the why, what, who, how much and when.
Vision and value proposition
This is your 60 second elevator pitch that describes in a nutshell the problem you are solving and why it is worth solving for customers. These one or two sentences may be the hardest you have to write to pitch it right. Imagine you are writing it for a Tweet.
This is where the storytelling can often help by bringing alive the problem, challenge or gap in customers’ lives. Can you think of one that illustrates with passion the need, gap or want you have the solution to?
This is about your target market. Really zoom in on who your solution is aimed at. While you may hope that everyone could benefit, you will have more success if your design and focus is on the most likely customer segment.
Prospective investors will find it more realistic and reassuring to see that you have researched the market. They will be more impressed by your understanding of the size, location and data around different customer segments and how groups of customers are currently underserved in the market. A customer segment is only valid if you know who those customers are; what their needs are; that there is a sufficient number of them to make it worthwhile and that you have the means to reach them.
You might well wonder why this is not upfront in the presentation, but remember this is a narrative. Where a ‘new to the world’ idea, invention or particularly technical product or service is concerned, you will have to ensure that your audience can first relate to the impact of your solution and the difference it will make to their lives (or businesses if you are aiming at a business market).
Having worked through your business model canvas and done your financial homework, prospective investors or partners will want to know how you propose to make money. This means how you will compete and the revenue streams that you anticipate. Some business types provide a range of revenue streams over and above product sales – e.g. a hairdressing salon may make most of its money from cutting hair but could also make more money from selling hair products such as shampoo. A business based on tourism or an experience may sell merchandise like tee shirts.
As you learned earlier in the course, one of the obstacles to overcome is a lack of trading history. While you may not be able to demonstrate a long history of sales, you may well be able to demonstrate that your idea already has some traction in another market, how well received it has been in focus groups, or that you already have had early interest, forward orders or other proof that your concept is a success. Perhaps you have won a competition, early funding or press coverage for your idea. Successes such as these are reassuring.
In Session 4 you considered your marketing strategy. Having decided on your target markets, this section of your presentation should concentrate on your sales strategy – who will sell your idea, what sales channels, e.g. website, social media, face to face (e.g. pop-up shops, festivals etc.), and tactics will you utilise? What are your key messages and what features will you emphasise?
Why should your audience take a chance on you? What are your previous achievements? What skills, knowledge, experience and track record do you have that will make you successful? What about others in the team (not only employees, but also partners if you have them)?
Being realistic about what you have in place and showing that you recognise where you may have gaps will be reassuring to others and may also net you some new supporters or partners who want to work with you.
This is where the work you have done on forecasting profit and loss, and understanding your cost base and your potential revenue streams comes in. For a presentation or pitch, you would be unlikely to require a lot of detailed spreadsheets or financial statements. However, if you are able to show graphs, trends and a summary of the overall picture, this will demonstrate that you understand and can manage your cash flow, can control your costs and know where your breakeven point is. This helps prospective investors or funders to understand when they are likely to expect a return.
Prospective investors or funders will also want to understand that you have a firm grasp of your finances and so you should be prepared to discuss the underlying assumptions behind your figures. There is little point in overstating the potential income as most experienced, prospective investors will immediately discount these in their own mind.
You considered your competitors earlier in this course and as such you will recognise that they could take several forms. Some might be a direct competitor – a straight choice between two alternative solutions; others will be indirect competitors in the same way that a home shopping delivery service is an indirect competitor to a retail outlet. Both provide the same solution for the end customer – their groceries or other shopping items – however, the business model and experience are very different.
When discussing competition you will want to demonstrate that you understand that end customers have a choice and that you are providing a viable (better) alternative that will compel them to switch product, supplier, experience or channel. If you have discovered that you are filling a currently unmet need, then you should also consider what people currently do, or make do with.
This part of the pitch is where you say what funding you need, either in the form of seed funding to get started, or growth funding to develop your business. Investors will want to have some detail of the planned use of funds. They will use other financial details to assess whether the plans are realistic and judge the prospect of making some sort of return on their investment.
In earlier sessions you came across the need for an ‘exit strategy’, that is, your long-term plans to divest yourself of the business either through passing it on or selling it. Investors will want to understand how likely and how long it will be before they get their investment back and in what form. Will it be through equity (a share in ownership), dividends or other means? They will also certainly need to know exactly what return they can expect.
Prototype or demonstration
As the introduction to Section 3 on creating your pitch mentioned, the purpose of the pitch is to create a favourable and memorable opportunity to engage others in your business. Few things are more successful in achieving this than an effective physical demonstration. Whether this be a prototype (an early manifestation or mock-up of a physical product, a model) or a simulation, this will show and tell the audience about your idea more than a thousand words.
- ensure that you have the correct environment and surroundings to make the demonstration work
- ensure you have practised it so that it goes smoothly
- make sure that your demonstration will stand up to the enthusiastic testing of someone in the audience, if appropriate.
For example, you could be scoring an own goal if you claim your product is a simple, streamlined way of executing something but you then cannot get it to work! Take especial care to ensure you have a good broadband connection if you are working with the internet.