WHY IT IS NEEDED
In this topic, you will find out the main principles and techniques of presenting or “pitching” your business idea. To communicate the business idea in a successful way you need not only to know the substance of your idea, but also to put out the convincing arguments. Therefore, it is important to master the main guidelines for “pitching” the idea and develop public speaking / presentation skills.
Entrepreneurs put many efforts while working on business idea, its validation, financial projections and all other important aspects the potential investors, decision makers or customers are looking for. When you reach the stage, where business idea is developed enough to be presented for the public – it is time to think about the way it should be communicated. Sometimes entrepreneurs need to be reminded that if the idea is not presented in a clear and convincing way – all the efforts you have made up to this point can become insignificant. Thus, do not underestimate the importance of the idea pitch and have in mind that the way you deliver the presentation is of fundamental importance and can determine the future of your startup. It takes time to deliver a splendid business idea pitch and you need to work not only on the structure of the presentation but also on your public speaking skills. Thus, in this chapter we will discuss how to deliver high quality and memorable business idea pitch and what public speaking skills you should improve to achieve success.
1. Stick to the structure of business idea pitch
There are plenty of start-up events happening every week where entrepreneurs have a chance not only to hear great inspiring stories, experiences and advices from the gurus of start-up world, but also have an opportunity to pitch their business ideas in front of committee. Usually the time dedicated for the company to present its business idea is very short and can take from 30 seconds up to 15 minutes.
Thus, it is important for you know how to present your business idea and business plan in a short, structured and convincing way. The ultimate goal behind the business idea pitch is to attract funding from your potential investors. The pitch can also be useful for attracting important customers that could help your business pick up. There are several levels of business idea pitches that can be used in parallel and in different settings.
High-concept pitch, which is also called “twitter-pitch” is the summary of main business idea in one sentence that can be formulated in a fun and attractive way (e.g. “We are Ryanair of the seas” for a company of affordable ferry logistics). This one-phrase pitch can help raise the initial interest, and lead to further information that should be available at hand.
Elevator pitch is explaining your business idea in less than 30 seconds. The name “elevator pitch” comes from the expression – what would you tell if you only had the time for the imaginary travel with elevator. There are many situations in business life when you can attract an interest from important and powerful partners, but have to use the opportunity very quickly before it is gone. You can imagine a ride in the elevator with a key investor who enters quite unexpectedly, and you need to grab his/her attention with a short story before the door of elevator opens, and he/she is gone. Such “elevator pitch” can happen in many different settings, and you have to be prepared to give an attractive 30 second talk on your basic idea. Obviously, such “elevator pitch” is just a slightly extended version of “high-concept pitch”, but your main goal is to get the person’s appointment for a more extended business meeting where you can explain idea in more depth. It can help you get the attention and basic interest, but then further actions are needed.
Pitch deck is a more extensive presentation of your business idea and business plan that can take up to 15 minutes (before the discussion starts). The presentation of business idea as Pitch Deck can undertake various forms. The most common way of presenting the idea is using Ms PowerPoint presentation (i.e. slides). However, the idea can also be presented “live” by using the poster or just drawing the concept on a piece of the napkin. The presentations that are based on live interaction with the listeners are probably the most effective and convincing.
When making a slide-based (PowerPoint) presentation, it is important to remember the 10/20/30 rule proposed by a Silicon Valley venture capitalist Guy Kawasaki. The rule means that your presentation should have 10 slides, not last more than 20 minutes and contain no font smaller than 30 points. Ideally, you should plan having 15 minutes for presentation and 15 minutes for questions and comments. You can be given more time, but you should always be prepared to cut down the presentation to 10 minutes or even less.
Your 10 slides should contain the following information (please read more in the guidelines “Meeting the Investors”):
- Solution that you propose / size of the market for this solution;
- Business model;
- Underlying magic / technology;
- Marketing and sales;
- Competitors / alternatives;
- Your team;
- Milestones, costs, revenues and projections (realistic and detailed);
- Sustainable competitive advantage (how your business idea / market can be protected from imitators);
- Summary and call to action / exit for the investors.
Your business idea pitch should result in an overview of the business plan that sounds realistic, evidence-based and believable. It is important that you switch into the thinking processes of your potential investor, which can be quite different from the way the entrepreneur thinks. Investor will be more concerned not with “changing the world”, but with getting a fair return on investment in a short to moderate time frame (3-7 years). Your pitch should address this core investor’s concern (“how and when will I make money?”). You have to prepare the answers to the question how the investment will be monetised (e.g. licensing agreements with larger companies, selling the business to larger company or initial public offering (IPO) at a later stage).
You can also provide your audience with the hand-outs, especially if your presentation contains more technical information that you would like your potential partner / investor to take a look at even after the presentation is over. Creating the right first impression matters a lot, but the final decision to participate in developing your business idea will most likely be done after an in-depth reflection. Usually, it will not happen at the moment of your pitch – this is why you need to leave the partner with some tangible material for consideration. On the other hand, giving away discreet information (e.g. regarding finance or technology) may not always be the best idea before you agree on the confidentiality (if necessary), but it can be hard to get the potential investors sign the non-disclosure agreements (NDAs) at the beginning of the pitch.
2. Avoid traps and most common mistakes
The listener will always try to fit into their “box” or category. It is hard to prevent the business idea from becoming a victim of stereotyping. It is a common bias of idea “catchers” who often have to compare a lot of different ideas, and have certain filters for judging what they consider a prospective idea. These filters can often be quite individual and subjective. Can you minimise their impact when presenting the business idea? One way to do it is to involve the listener into the co-development of your proposed idea. A chance of positive evaluation increases dramatically when listener starts feeling a degree of “co-ownership”.
One of the key tasks is to avoid fast elimination of your business idea during the initial pitch. Actually, this is when most of the business ideas “get killed”. So avoiding the key mistakes is even more important than showing the brilliance of your idea:
- You have to stand for the idea that you are presenting, while remaining open to the listener’s suggestions. If you are too fast going into compromises or eliminating certain aspects of the business/product according to the listener’s suggestions it will most likely, paradoxically, work against you. It may send out a signal to the listener that you did not think deep about the idea, or you just do not care about it strong enough.
- You should avoid presenting your idea in a mechanical and formulaic way as if you have learnt it all by heart. The listener prefers a live interaction and engaging communication. You should not just repeat the information presented on your slides, if the listener wants you to reflect on some other questions. Be flexible enough to adjust to the situation and change the course of presentation.
- You should avoid being too pushy and aggressive with the proposal you are presenting. The listeners avoid the “hard-sell” salesmen types, who appear arrogant and appear to push the listener to making the decision without considering the doubts and questions that listener may have. You should be presenting in a sensible way, not trying to present overoptimistic data that will make the listener suspicious of your integrity. So being open and capable of listening to the other side is one of the keys to the successful pitching.
- You should not appear in a desperate need of selling your business idea / finding an investor. It is important that you present the value of your business idea / product in a way that it does not show that you badly need a partner / investor. The listener should get an impression that it is still time to be on board with this idea, but this chance of becoming partners will not last forever. So you should think of introducing an element of scarcity and “one time offer” into your pitch (while at the same time not creating a sense of arrogance).
You should avoid pushing your potential investor to sign a non-disclosure agreement (NDA) before the pitch – most of the potential investors will never sign the documents that they can later be sued upon. In most cases, what appears a highly original idea to the entrepreneur is not something unheard of to the professional investors who participate in many pitching events. So the investors will not take risk to sign a legal agreement on non-disclosure of something that may prove to be not really original (something they already heard or are likely to hear in the future from someone else). Most likely, your pitch will end before it even started.
3. Choose your pitching style
Despite the general principles of success and some traps to avoid, there are few recipes regarding the perfect pitching style. The way you communicate will depend a lot on the personality of the presenter as well as the receiver. Probably the main suggestion is to remain authentic, to show passion for the idea you are presenting and turn your listener into collaborator. Ideally, you should present the basic business idea in a fun and easy-to-understand manner that does not require listener to have special qualifications. A creative presentation that contains an element of show and involves the listener always has better chances of success. However, making an attractive and fun presentation is not enough – you should also show (in brief) your understanding of how this idea could be implemented in practice (i.e. what are the main steps, how it will make an efficient use of invested resources, etc.).
Although there is no one “golden rule” regarding the ideal pitching style, probably the most widely adopted (and probably the best “selling”) style is the so-called showrunner. Showrunner has most of the above-mentioned characteristics, i.e. has a strong charisma, presents the idea in attractive and easy-to-understand manner, while at the same time shows technical understanding of the implementation. The problem with showrunner types is that they can be perceived by the listener as selling the image and lacking substance. So if you adopt the showrunner style, you really have to complement it with some expert knowledge, especially regarding the implementation.
Artist is a more an introvert type, who can be presenting the idea as product of own original thinking – they can also be perceived as the creative types worth listening to due to their originality and the fact that they “live the idea” they are presenting. Artist-types are perceived as nonconformists that have something innovative and valuable to say, but are probably not the most expressive communicators. The dark side of the artists types in “selling” the business idea is that they can be perceived as being “too weird” for the corporate types and lacking a more practical mindset.
Fast learner type is the one who does not try to sell convincingly the established competence (as showrunners do), but try to present a new perspective without the baggage of “old knowledge”, and is trying to learn along the way from the listener. This is the selling style of a curious star student when he/she approaches the professor and is willing to present own ideas while proactively learning along the way. This type gets the listener engaged and willing to participate in co-developing the idea. Fast learners present their ideas in such way that they turn listener into a good-willing mentor. In a way, they sell not only the idea, but their humility and willingness to grow along the way, which appears attractive to the idea “catchers”.
4. Have a story to strengthen your pitch
Identify 3 different audiences (e.g. investors, potential customers, potential partners) for your pitch and come up to 3 different attention grabbers to start your pitch.
|#||Audience||Attention grabbers to start your pitch|
Think and write down two different stories that could be used during your pitch in order to maintain the attention of the audience.
5. Constantly work on your public speaking skills
Making a successful business idea pitch means getting your message across to the other party in attractive, easy-to-understand and structured way. However, you need to work not only on the content of your presentation, but also how you are planning to present it. How you present it is as important as what is being presented. Here is some practical advice regarding the public speaking skills:
- Start strong with an attention grabber. For example, you can start with presenting the problem (e.g. some shocking statistics) that no one has really solved before you in a sufficiently effective or rational way. People are usually much more sensitive to the negative information, and get easily excited / curious how genuine problems can get solved.
- Support you presentation with a good story. People enjoy interesting narratives, stories from real life. You can use a story to maintain the level of interest when the presentation gets “too dry”. Of course, pitch that lasts less than 15 minutes can only contain 1-2 stories. You have to be careful not to go out of your time limits.
- Know the audience you are talking to. Good public speakers always know their audience. If you have people with technical backgrounds as part of your audience you will have to be ready go into greater specifics at the end of your presentation (e.g. present them with figures). If your audience is more of “strategy” type, you can keep the pitch on a more conceptual level (though having strong and convincing figures always helps). Never forget that your presentation is about your audience, not about you!
- Your speech has to move people into action. You have to make presentation with an ultimate goal in mind, e.g. getting the investors share your passion for the business idea that can offer financial returns in short / medium perspective.
- Do not read during the pitch, unless absolutely necessary. Your pitch has to be authentic, personal and convincing – if you start reading the slides, it significantly reduces your credibility in the eyes of the audience. You give an air of someone who does not know enough about the area being presented. So you should practice the presentation to the point when you know everything that is in the materials you are presenting.
- Be positive, create a right psychological atmosphere during your presentation. You should try to keep an adequate balance between strong in your position (i.e. clear arguments, self-confidence) and not appearing arrogant or patronizing (i.e. as someone who is not listening or emphasizing with the audience). Always try to react to the feedback from the audience and provide them with honest explanations.
- Use the eye contact and body language. The way you use your body language and eye contact with your audience can have a significant effect on the effectiveness of your public speaking. People take a lot of contextual information from the way you present it (i.e. not only verbally, but non-verbally as well). Of course, you have to be careful with the cultural element in your audience – different cultures have different approaches to the eye contact and body language. Your body language should not make you appear nervous, but rather calm and confident.
- Make pauses at the right time. Your presentation should not be rushed too fast that would make difficult for listener to concentrate on your key messages. Make 5 second pauses before announcing your key statements – it grabs the attention of your audience.
- Use attractive metaphors and analogies – they sell! It is much easier to convey your idea by using good analogies and metaphors that people in the audience can relate to. They help make your complex ideas sound simple, and people enjoy simplicity that helps their understanding. As a presenter you have to simplify your concepts to such an extent that makes them more easily “sold”.
- Use visual aids with care. Although good presentation should be visual, you should not overload it with audiovisual materials because it may distract from your the message, can be too time consuming (remember you have max. 15 minutes), and can cause all kinds of technical problems (e.g. due to incompatible PC software) that could get your pitch off-track. So focus on the “safe” visual aids that will never fail you (e.g. presenting samples or prototypes as “visual aids” that can be touched by your audience is even better than some hi-tech presentation).
- Prepare well ahead of time, but be flexible and open. You should prepare your presentation in advance and practice it to different audiences (e.g. your family) a number of times. But repeated practice of the same presentation should not make you sound formulaic and inauthentic. Always be yourself when communicating the idea – other people will only believe it when they feel this idea is “part of you”. You should also be always waiting for the feedback from your audience, and adapting to it. This way your pitch becomes interactive and engaging. As already mentioned, the chances for success are much greater when the listener becomes your collaborator. Thus, your presentation is about getting from monologue to dialogue / discussion.
In order to deliver a memorable and effective startup pitch, as a presenter you need to have somewhat contradictory qualities. You have to appear strong and convincing in your position without sounding arrogant and patronizing. You have to be able to tell good stories and evoke emotions in your audience, but at the same time to have some strong data and analysis to support your position. You have to be short and well-structured in your presentation, but also to present key ideas in sufficient level of detail and depth. You have to be visual and expressive in your presentation, but not to the point that it distracts / overloads the listener from your key message. You need to fight for your investor’s attention with a strong “attention grabber” and some “show” elements to get them excited, but at the same time to provide some clear and technical data how their investment will be monetized upon.
You need to keep in mind that business idea pitch is only the beginning of a long common journey with your potential partners, and it is only up to you what first impression you will make.
After completing this chapter you have an understanding of:
- the variety of different business idea pitches and when to use them;
- what it the recommended structure of business idea pitch;
- what it takes to deliver business idea pitch and what are the common mistakes and traps entrepreneurs should avoid;
- public speaking skills that could help you to capture the attention of those who are listening.
Final advise for you – remember that at the end of the day, what will matter is not how good the business idea appears to you, but how well you were able “to sell” this idea to your future customers, partners and investors. So work on that!