If you’re an entrepreneur, you no doubt have a really cool idea and a great plan to turn that idea into a successful business, right? There’s just one problem—how do you show investors that your idea is not only viable but that it will be profitable for them if they decide to back you?
Basically, you just need to have confidence in your product or service, and you need to do your homework so you can answer all of your investors’ questions when you pitch your business to them. Now, you’re probably thinking, “Easier said than done,” but I’m here to tell you that it’s not that difficult to build confidence for talking to investors.
Even if you don’t have any experience with public speaking, and the idea of talking to investors ties your stomach in knots, if you know that you have all of the answers to your investors’ biggest questions, you’ll gain at least a little bit of confidence. Then, when you practice answering those questions, you’ll gain more. The more familiar you are with your subject and what your investors want to know, the more confident and comfortable you’ll be when you talk to them. So what are those questions?
WHAT PROBLEM DOES YOUR PRODUCT SOLVE?
If you’ve been around the entrepreneurial community, you’ve probably heard this one before, but it’s always worth repeating. If you can’t tell me within a few seconds what problem you solve for your customers, then I’m going to check out. On the other hand, if you can immediately show me how you make people’s lives better and what kind of problem you solve for them when they buy your product or service, then you’ll have my attention.
HOW BIG IS YOUR MARKET?
Next, your investors want to know how big the market is for your product or service. You could have a very clever idea that solves a huge problem, but if that huge problem only affects a small number of customers, I’m not going to be that interested. If, on the other hand, you can show me that you solve a wide-reaching issue and that there’s a large market demand, I’ll keep listening.
HOW ARE YOU GOING TO MAKE MONEY—NOW AND IN THE FUTURE?
So you have a great product that solves a significant problem for a pretty large market. Great, but how are you going to make money? And don’t just say, “By selling my product.” At this point, I need to see some numbers. I need to know how much it costs you to produce your product, what kind of marketing budget you’re looking at, how many sales you expect in the first quarter and first year, and when you expect to see a profit.
Then I want to know how you’re going to keep making a profit. What if everyone in your market bought your product in the first year? Would you have a plan to keep making money after the market is saturated with your product?
WHO IS YOUR COMPETITION?
Even if you don’t already have competition, I want to know the barriers your potential competition will face for entry into the market once you’ve gone public. I want to know that you have a plan for staying relevant and keeping your customers’ attention…because you’re always going to have competition, and the best entrepreneurs, the ones who get investor capital, all know that, and they know how to handle it.
Want to learn more about answering your investors’ questions and starting a business? Check out a session of Daymond John’s Success Formula. You can register online at www.DaymondJohnsSuccessFormula.com.