10 Ways NOT To Win New Business Funding
If you’re determined to fail miserably in your attempt to win new business funding for your venture then who am I to stand in your way? In fact I’d probably cross the road to avoid you, mainly because I’d be worrying whether your particular strain of stupidity was infectious, but also because the crazy eyes and mouth frothing would probably make me a little nervous as well!
Why is it that so many people seem to leave their brains at the door when they pitch for new business funding? Seemingly, the thought of standing in front of someone whose investment decision could quite possibly change the fortunes of their business is enough for many people to self lobotomise! Now I’m not a fan of DIY brain surgery, so if you’re with me on that one, have a read through our ten golden rules on how you shouldn’t act when attempting to convince an investor out of thousands of pounds in new business funding. This article is here to shine a light on the most common mistakes so you don’t have to make them too.
1. Completely fluff your figures
For some unknown reason entrepreneurs still walk into their new business funding pitches without a clue about their finances. This is complete madness and will ensure them a quick exit. Investors are not there for a chat or to dispense free business advice. They are there for one reason and one reason only – to back the venture that they believe has the best potential. Without a full and complete understanding of your finances and forecasts how can they possibly back you?
2. Exaggerate wherever possible
At some point in their childhood many would-be entrepreneurs must have been taught that to get anywhere in life they have to lie. I know that sounds a little controversial, but if it isn’t true how come so many attempt to baffle, bamboozle or out and out b******t their way through their pitches? The new business funding process is long and very involved so any inaccuracies, omissions or exaggerations will catch up with you sooner or later, leaving in its wake one very upset investor. The truth, the whole truth and nothing but the truth is the only way to approach a pitch for new business funding.
3. If you don’t know, just make it up
To enter a pitch with a view to deceiving an investor is indefensible, but fear of an admission of not knowing an answer has tempted all too many to attempt to deceive an investor on the fly. Saying that you don’t know is not wonderful because it shows a lack of preparation, but it is a position you can come back from. Being found to be making it up as you go along will lose you trust, reputation and the new business funding you’re there to pitch for.
4. Underestimate your competition
Any investor worth their salt will need to uncover the threats to your business to determine how secure their money would be should they decide to provide you with new business funding. Competition is usually the biggest threat, and the worst thing you can do is to underestimate this. You should know everyone else in your market, their financial situations and customer bases, but you should not stop there, you should look into related markets as they may also be competing for the same customers as you. The answer, “but we have no competitors” will be met with much scepticism.
5. What’s the point of research?
Preparation is key to a successful pitch. Without it you will be sure to flounder in the face of even the most basic questions that an investor is likely to ask. As I’ve already mentioned, you need to know everything about your finances and forecasts as well as your competitors. But you should also be an expert on your market, your target customers, marketing methods you hope to utilise, and be able to verify where this information came from.
6. More information, more knowledge
Some entrepreneurs believe that the more data you provide, the more convincing it will be. Nonsense! Investors are busy people; they want to understand what your business does, who you are and why they should invest in you almost instantly. Provide them with the bare bones, grab their interest with the pertinent facts, then leave them begging for more. Whet their appetites and the new business funding should be in your account in no time. Bore them ridged and you won’t be heard above the snoring!
7. We’ll do it because everyone else is
Differentiate, differentiate, differentiate. If you are going to win the new business funding you’re hoping for you need to give an investor a reason to believe that what you are offering is special, something unique and because of this, something that they are going to earn a lot of money from. If you fail to convince them of this then kiss your funding chances goodbye.
8. Dress for comfort not for corporate
There are those out there that believe that you should dress comfortably for an investment meeting. After all, the more at ease you are the more they are going to understand the real you, and the less likely it is that you’ll feel nervous in your pitch…Rubbish! I’m not suggesting that a suit is right in every circumstance, but you have to show that you are serious about your venture and for many businesses this means a corporate environment, and being accepted in other corporate environments. If this describes yours, then at least dress smart.
9. Team, what team?
Going it alone provides one with a sense of achievement, a buzz from facing the odds and coming out the other end knowing that you did it without intervention from others…er, what are you talking about? New business funding is rare for one man bands for the simple reason that you have no backup, you have no advisors to offer direction and focus, and you have a limitation on your productivity. Increase your chances by surrounding yourself with experts, and even if they are outsourced they will lend additional credibility to your pitch.
10. Preparation is for wimps
In my time I’ve met so many individuals who say that they work best under pressure or that they are so good at public speaking that they don’t need to practice. Almost without exception they have fallen foul to nerves, poor memory or the involved questioning that always follows a pitch for new business funding. Preparation is key to the success of your pitch. Practice on friends and family, practice in the mirror, but do practice.
