Did you know there are more than 27 million small businesses in the United States? So as an entrepreneur, you need to ask yourself this question: how can I beat the competition?
There are lots of answers out there. One of the best ways to achieve rapid growth is through investment. But how can you stand out against all the other businesses looking for an investor?
One fundamental way is to have a perfect investment pitch. That's why we've outlined the things you should include in your pitch here. Check them out below.
Market Size and Growth Projections
Start your pitch by capturing the investors' attention. Share with them the size of the market you're going after.
For example, if you manufacture cosmetic products, share the size of the current cosmetic industry in the U.S.
Then, discuss your projections for growth over the next few years. These big numbers (preferably a double-digit growth rate in a multi-million dollar industry) will catch the investors' eye right off the bat.
Well-Developed Business Model
All investors want to invest in businesses that are thought through and organized. They don't want to have to come in, establish a brand new structure, and run the day-to-day operations.
Instead, you should present a well-developed business model that shows costs, pricing, and margins.
Keep in mind that potential investors like to see gross margins above 50 percent and the higher, the better. If you can display opportunities to upsell customers or to start a subscription model that will bring in recurring revenue, this is even more appealing.
If you've seen Shark Tank, you know how important this one is. Potential investors love to hear about your sales.
The ideal situation here is to have a strong sales track record. This shows that customers are interested in your product and that you can close a deal.
But if you're just starting, don't fret. You can still succeed in this department by demonstrating your sales plan and by explaining what you're doing to get the word out about your company.
Also be ready for additional questions, especially ones that focus on the future of your business' sales. "How will you maintain the sales?" is a common one. Brainstorm answers to these beforehand so you're as prepared as possible.
Include Intellectual Property in Your Investment Pitch
Do you have a patent or trademark? Investors love to hear this because this means your chance of getting knocked off by competitors is much lower.
Whenever a new successful product enters the marketplace, other entrepreneurs try to copy the idea. But with a patent in place, this is much more difficult, and you have legal recourse if they do.
Be sure to mention this in your investment pitch.
Investment Request and Equity Offer
Last but not least, be sure to talk about the size of your investment request and the equity you're willing to offer.
You need to give a definite amount your potential investors. Then be prepared for a counter-offer and have a number in mind that's your limit.
This way, you'll be prepared for the negotiation process.
Congrats! You're now informed about what you need to include in your investment pitch.
Have other questions or want to learn more about investing? Check out our blog for helpful tips and tricks.