Showing understanding of the business and the market is required to attract the savvy investor. The level of understanding depends on the role of the entrepreneur, whether it is leader or the able expert. The leader is comfortable and informed enough to make decisions or pick the people who can make those decisions. The able expert can do a deep dive into the subject and also communicate effectively with non-technical people without boring them.
The March 23, 2009 post discussed many questions that the investor may ask to illuminate whether the entrepreneur does have this clear understanding. This post looks at how to answer one of those questions:
Can you tell me about your business?
First, let us look at what this is not. This is not an avenue to tell the investor about the entire history from idea inception, every step (good and bad) and what you did yesterday. The answer needs to be concise and address what the investor wants to hear.
Other ways to look at this question:
- What problem does your business solve, product it makes to solve that problem, and how well are you doing?
- What are the three most exciting things that happened in your business that tells me you will be successful?
- What are your business’s three biggest strengths, differentiators, or uniqueness?
- What is important about your business that I should care?
If you, the entrepreneur, have not done your pitch statement, then that is the time to do it. However, usually, your pitch is part of your opening line, or the investor will say, “Great. Tell me more about your business.”
The four questions above are a good order for priority. The first statement is very similar to the pitch; so, if you have given a pitch similar to it, go to the next statement. Starting with statement one, an example for a company selling a GPS tracking device might be:
1. Our company helps people keep track of their valuables when they leave the house or travel far away from home. We sell an affordable patented tracking device that you can attach to anything and track via a web connection.
2. Last year was very exciting. With family funding we patented the device, produced product and tested successfully. In two metro markets, we had a very successful sales launch and we are talking with some large chains to go nationwide.
3. Our product is patented, and can be produced very cheaply. It retails at a price point around $50 for 5 units, making it very affordable and attractive to the consumer. There are two levels of subscriptions, both coming with 6 months free subscription. Finally, we make the product fun. The web site is designed so that you can also allow other people to see the location of each item, and tie it into your social networking sites. You can attach it to your luggage, dog’s collar, car, just about anything and you and your friends can watch where it goes.
4. In these troubled times people care about safety, want to save money, and enjoy life. We deliver all three. The product can be hidden inside things or camouflaged. By allowing people to track anything we combine and deliver peace of mind, efficiency, information, and fun.
Each statement is a deeper hook into the person learning more about the business. After each statement, you can pause and get the listener’s feedback. They may have heard enough, ask a different question, or are waiting to hear more.
Telling someone about your business is supposed to be exciting and informative. Focus on three exciting aspects of your business that will cause the listener to care and learn more. Preparation is most critical. Use levels of detail, build excitement, and focus on the most important aspects of the business. The audience can see the entrepreneur’s enthusiasm for the company. This will hook the listener and get them to believe in the product and the entrepreneur.
