At some point in time, or at a lot of points, we’ve all been asked the question, “So what is it that you do?” As entrepreneurs, this question carries the subtext of, “So what is that your startup actually does?”
Whether it’s an extended family member at the holidays, a friend you haven’t caught up with in a while, or even a potential investor, you only have a short amount of time to give them an answer that gives a broad enough view of your business but is specific enough to be engaging. The way that you answer this question may be the make or break point in selling your idea to others.
The sixty-second elevator pitch has been heralded as the key to providing these answers but entrepreneurs need to move beyond this type of pitch to accurately convey their identity in long-form answers. Your elevator pitch can get your foot in the door with a potential investor, but won’t cut it in any investor meeting. Likewise, a sixty-second pitch isn’t enough to accurately convey your business model, culture, and presence to the media or to your customers.
Start With the Problem
A good business pitch identifies the problem that your startup solves for potential consumers and offers a real solution to that problem. Too many of us start with a solution: the product or service that we know we want to offer and work backwards towards a problem. But if this solution doesn’t actually solve a problem that people have, it’s rendered useless. Your solution has to address a problem head on, but this problem also has to resonate with a sizeable target market.
Simply, your solution needs to address a problem that a significant amount of people have. The problem that your solution tackles should be one that other people have. Here it can be helpful to run focus groups and market research to see whether others agree that it is a problem. Identifying, and then conveying those findings to others, your target market requires balance.
While the temptation may be to identify large potential markets that encompass significant proportions of a population, you run the risk of losing credibility. If your solution can only reach a small niche group, like adults living in the Pacific Northwest who have dogs or some other extremely specific group, investors will be hesitant to supply you the capital you need when they see little room to grow their ROI.
Tailoring Your Pitch
At this point, your pitch will need to be tailored to your audience. A writer who is covering your launch needs less information about your inner financial workings than an investor will. Likewise, your friends at a social gathering don’t need to know your strategy for building a team to carry out your vision.
Investors want to know how much capital you need, how you will use it, and when they can expect to see milestones being reached. Here, your business model needs to reflect your profit/loss margins, costs, cash flow, and your current balance sheet. Your sales projection, or your forecast for future sales, doesn’t necessarily need to be a detailed five-year plan. It should, however, be limited to a certain time frame.
Address the Elephant in the Room
They will also want to know how you plan to address your competition. Every startup has competition. Even if you truly think that you’ve found a solution that addresses a problem that no other business is currently addressing, consumers are creating their own workarounds.
The one exception may be related to solutions that address new technology, but the competition for these solutions is fierce. What makes you the right startup to address these problems? In what ways will you offer a better solution than the ones that are already on the market?
A successful pitch takes careful planning, due diligence, thoughtfulness, and practice. We can see how our product will improve the lives of our customers, but if we aren’t able to present our solution in a compelling pitch it does us no use. Like Peter Coughter wrote in The Art of the Pitch, “We all fall in love with our own ideas. The trick is to know when to fall out of love with these ideas and get out of the presentation.”