When competing for an investor’s attention, an entrepreneur should combine their passion with detailed business information. Investors want to know why people will care enough about the entrepreneur’s product or service to buy it, but they also want to know how the business will make money.
To satisfy investors, entrepreneurs should focus on numbers and, the more accurate, the better. Pricing, turnover, breakeven points, profit margins, competitive market share, production costs, overheads—investors want all this information and more. How will price combine with volume, for example, to meet the entrepreneur’s projections? How did the entrepreneur arrive at the business’s income and cash-flow projections?
An entrepreneur should present this information accurately and without equivocation. Investors who discover irregularities in an entrepreneur’s numbers may walk away.
Entrepreneurs should also explain clearly what they intend to do with the money; additional working capital may require a different form of financing than the acquisition of fixed assets.
Entrepreneurs should talk about their ideas in plain language; they may specialize in robotics, financial derivatives or nanotechnology, but the language of making money is simple and universal.
Finally, entrepreneurs should not get discouraged if their pitch fails; even unsuccessful pitches generate useful information and investors should provide good reasons for rejecting an idea. Entrepreneurs can use this feedback to help improve their pitch until they get it right and get their deal.
Listen to Dialogue in the Den where along with Dragon Arlene Dickinson, where she explains how negotiation requires confidence, persuasiveness and flexibility.
Brought to you by KPMG EnterpriseTM
By Beth Wilson, Toronto Managing Partner
KPMG Enterprise. Trusted business advisers to the Dragons.
The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG LLP. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
Posted on Nov 30, 2009 11:48:56 AM
