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ServiceScape Incorporated
ServiceScape Incorporated

7 Questions to Answer in Your Business Pitch

At its core, a business pitch is a presentation given to an investor, inviting him or her to consider investing in your business idea. This can be done in several different ways — online and via e-mail, in-person, or through requests for pitches/proposals. With nontraditional methods employed by the influx of business incubators and accelerators in most major cities, the business pitch has replaced the business plan as a buzzword among start-ups. From the idea of an "elevator pitch" (which is basically your business pitch in the few minutes it takes to ride an elevator with someone), to the 30 to 50-page business plan, the business pitch falls somewhere in the middle as a way to attract investors and to convince them to fund your entrepreneurial idea.

So, do I even need a business plan if I have a business pitch?

So, do you even need a business plan at all? In her article in Forbes, Sabrina Parsons, CEO of Palo Alto Software, expresses concern over the assumption that a business plan is a thing of the past. While she admits that the days of 30 to 50-page business plans might be over, she points out that a true venture capitalist will want to see the numbers and details that a business plan provides.

So, go ahead, pitch, she writes. Don't send a business plan to anyone. But you better have done your homework and have all the research somewhere-- so that when that Venture Capitalist asks you a pointed question about why your forecast is realistic, you can launch into an intelligent response that covers your market, the size, the competition, and your pricing, which will show that Venture Capitalist you actually do know what you are talking about, and could potentially implement this business.

The lesson here is that you can't have a great business pitch without a great business plan to give it a backbone. But once that's the case, and you've done your research, here are seven questions you should be ready to answer during and after your business pitch presentation.

Question 1 — What is the competitive landscape?

Any business plan or business pitch needs to contain a solid picture of the competitive landscape surrounding the proposed business. Who are the competitors? What are their strengths? What are their weaknesses? What do they do that you plan to do better; or in other words, how do you plan to compete with them?

Understanding the competition is a large part of running a successful business. In the same sense that when pitching a novel to a publisher, a novelist will need to know the sales statistics of other writers who have successfully published in their intended genre, and how he or she will be different from those writers — you need some numbers to run by your potential investors to show them the high odds of your business being a success. In the simplest of terms, you need to know and be able to clearly present what else is out there that's similar to what you're doing, and know details like what they're charging and what's included. Not only will this help you to potentially fill in gaps in service or product offerings that other businesses are providing, it will also help you to narrow down the revenue you can expect to make by looking at the revenue of similar businesses.

Question 2 — Who is the market for what you're offering and how do you plan to reach them?

The next information that needs to be a part of your business pitch is the market for what you're offering and how you plan to reach that market. This can include demographics of your intended clients or customers. Being as specific as you can be in delineating each possible demographic will assist later — after your business is up and running — in designing specific marketing campaigns on social media or elsewhere. Such campaigns are targeted as narrowly as possible when optimized to reach the best audiences, so knowing these details on the front-end of your business preparations will be valuable insight.

Knowing your market will also help you to tailor your business' website content. If you're like most start-ups, your online presence is essential to what you're doing and a website (or social media) is required. Distinguishing your market will help your website reach the right audience and project the right brand image you are seeking to build.

Question 3 — What will you sell/offer and how much will you sell/offer over the next 12 months? What about the next 5 years?

This information should include details about the product or service you plan to offer in your entrepreneurial activities, as well as a forecasted volume of sales. These numbers should be based on solid research, with numbers reflecting current market trends and statistics. Whatever information you find that's relevant, document it and its source, keeping in mind to pull numbers only from valid, trustworthy sources.

Your sales goals should also be divided into periods — for example, the first year of business operation and the first 5 years of business operation. The business plans that do this correctly can also project further than 5 years. This shows your investor that you are prepared for things like changes in the market, and have set realistic sales goals to help you to keep up with how your sales are doing despite such changes. Even if you aren't completely sure of how the outlook of your sales will look within the next 5-year timeframe, planning for these long-term goals keeps you looking like you're on top of your game (even if you aren't!).

Having a forecast of your sales goals will work to your advantage in two ways. First, it will help you to set goals along the way — daily, monthly, or quarterly — and provide a well-researched reason behind the goals you set. Second, it will give venture capitalists a glimpse of the kind of revenue you plan to generate through your business, and essentially help them to get a bigger picture of "what's in it for them" if they choose to invest.

Question 4 — What are your overhead and inventory costs over the same timeframes?

Everyone has heard the adage that you have to spend money to make money. The overhead and inventory cost calculations that should be a part of your business plan and business pitch involve this exact concept. Investors know that these are numbers that will affect the bottom line, so they can't be overlooked when planning your business, even as part of the pitch. You need to know what it will cost to run the business you plan to run, and how much money needs to be spent up front to reach the point where revenue can be made. Without these details, it will seem as if you haven't planned your business from a practical standpoint, which is a red flag to potential investors.

You need to know exactly what will be required to have in your inventory, as well as the overhead that will be required in the basic operation of your day-to-day business dealings. Will you need a printer? Put that on the list. What about ink for the printer (which is expensive!)? Put that on the overhead cost list, as well. If a potential investor looks at your overhead costs and notices that you haven't determined these costs from a realistic vantage point, your entire business idea will start to not hold water.

Question 5 — What is your timeline and your plan to implement this timeline?

When hearing your business pitch, a potential investor will want to know about your timeline for the business, and your plan to implement that timeline. For example, you'll need to estimate important start dates for expenses incurred in the process of conducting your business. When will your "storefront" be open, and what will it take to get to that point? Five months into your storefront's being open, what do you expect to see as far as sales and inventory costs?

This timeline will sync with your long-term plans for cost and inventory, as well. Together, they will present an overall picture of how well you have planned out your business. In short, they will either make or break your business pitch!

Question 6 — How will you use the money invested in your business?

Venture capitalists are less likely to finance your business idea if they worry their money will be mismanaged. Because of this reality, most will want to see a detailed estimate of how the money that is invested will be used and accounted for. Within this analysis, they want to see that you've realistically planned for the business expenses that you will incur in the process of opening and running your business. They also want to make sure that you've included budgets for everything from assistants to paper to storefront costs if you are opening a brick-and-mortar store. Put simply, they want details about where the money is going and how it will be accounted for at all stages of the business enterprise — from planning, to execution, to managing for longevity.

Question 7 — What can investors expect to receive in return for their investment?

In addition to full disclosure of how their money will be spent in the day-to-day operations of a business, investors will, of course, want to know the return they can expect to receive for their investment. As the part of your business idea that is likely to be the most attractive facet to an investor, this ROI is the true selling point of the entire pitch. No investor will want to put money into something that will lose money for him or her, and this promise (or suggestion, rather) of a return on his or her investment is the part that must be solidly presented, with numbers to back it up. Investors also want to see that you have the business acumen to understand how to handle their investment wisely, and, hopefully, to not lose money in the process of trying to gain it. Once you have investors convinced that you know what you're doing — that you've run the numbers multiple times and are prepared for a myriad of potential problems — you'll have their ear and their money.

Final note

A business pitch and a business plan are likely to be looked over if they are full of grammar, spelling, or punctuation errors. Don't forget to have a second pair of eyes look over all of your writing — both for the business plan and for the presentation materials that you might be putting on PowerPoint slides or other software. Even the best-organized business plans can look unprofessional with just a few small grammar errors, as investors will wonder why you've allowed something so important to you to be overshadowed by misspellings and mistakes. Put simply: If your business plan and business pitch are rock solid, be sure your grammar, spelling, and punctuation used to relate them are equally as solid.

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