Like a Virgin: Secrets They Won't Teach You at Business School

SELLING CUSTOMERS IS EASY

Okay, so you have this earth-shattering idea for a new business that you are convinced will create some serious waves, make mincemeat of the competition, and might just make you a fortune along the way.

You’ve checked and rechecked the competition, surveyed all your friends and family on it, drawn up a business plan and assembled a team-this is it-you’re ready to take the leap.

Now comes the hard part.

Securing investment for a venture is a hurdle almost all entrepreneurs have to face, and most do it with extreme of trepidation. It involves spreading the word about your idea, finding prospective investors, and then defending your thesis-often with people with far more experience in the sector or, almost as bad, with idiots in suits who simply don’t get it.

This is one of the most challenging stages for any entrepreneur. So much rides on these meetings-how to get it right? Unfortunately there is no ‘one-size-fits-all’ formula when preparing a pitch for potential investors, but here are a few tips that I have picked up over the years.

One of my first presentations did not go at all well. Investors had asked to see me about Student magazine, which my friends and I launched as teenagers. Flushed by our early success, I talked at (not with) our potential backers, stridently telling them about my ideas for extending the Student brand. It was going to take the world by storm going way beyond publishing to travel, hotels and music. I think they were terrified by this precocious youth…but one way or another they did not invest in our magazine.

Twenty years later, when I was trying to launch Virgin Atlantic Airways, I was much more attuned to my audience as I pitched the idea to my fellow directors at Virgin, and then to a Boeing executive. Though our group had no experience in the airline business, by then I had learned the valuable ‘KISS’ strategy: ‘Keep it simple, stupid.’ It is vitally important to present a clear, concise plan that investors can easily understand and repeat to their own people. In the first meeting avoid overly complicated, numbers-laden presentations. Sell them on the viability of the concept: you can fill in a lot of the nitty-gritty detail at the second meeting. I described our plan to steal market share from the established airlines with flights tailored to the needs of business-class passengers as well as offering an affordable service that would attract holidaymakers. Our focus on improving service, bringing fun and glamour back to air travel, and our record of success in the music industry must have impressed the Boeing executive as he soon agreed to lease us a used 747. And at that stage my somewhat wary colleagues became enthusiastic, too.

The most important difference between those two presentations was that in the second I put myself in my audience’s shoes. Before you meet an investor, do some research: has the company ever made similar investments? Do they understand your sector or have experience with similar businesses. Tailoring your presentation to that person’s knowledge of your industry sector will keep them interested.

Strict attention to detail is critical. Long before the day of the presentation, make sure you go over every claim, statistic and projection in your business plan, check them over thoroughly, then check them again and commit them to memory. Know the markets you are going to target, your competition and how you plan to make your mark, and be prepared to defend your argument. What are its weaknesses and how will we overcome them?

Before you pitch, do a practice run or three with trusted colleagues and advisers. Get each person to play devil’s advocate and point out the warts you’ve been too close to see, or that haven’t yet made it onto your radar. Tell them this is no-holds-barred time and that they aren’t there to tell you what you want to hear, but rather what you need to know. Were your listeners persuaded? What did they find memorable? Could they repeat your message back to you? Take notes and act upon them-the next audience won’t be so nice!

If you’re preparing for a short meeting, pick three key points that will stick with potential investors. These should be things like: what makes your product or service different? Will it improve your customers’ lives? Why would people buy it? Write these points down on a postcard-size piece of paper or even your shirt cuff, and make sure you keep your message focused. With luck, your potential backer will be intrigued enough to call you back for a second meeting.

Dress to make a good first impression. The success of companies like Google, Facebook and Twitter means that not every prospective investor expects-or would be impressed by-a suit and tie. However, being on time and comfortably well-dressed will help to build early rapport.

As you make your presentation, how you listen can be just as important as what you say. Pay attention to your audience’s reactions and take the time to ask if they have questions. If it appears that you are not getting through, try to adapt your pitch to focus on the areas that interest them. And don’t make the common mistake of speaking almost exclusively to the audience member who’s nodding the most-he could be the one who’s falling asleep!

If your proposal is rejected, it’s not the end of the world. Ask for feedback. Did the investors really understand the idea? Do they have suggestions for improving your product or service? While their comments may be negative, it is important to keep in mind that their criticisms are not indicative of your chances of future success.

Finding investors to provide the capital you need for launch can be a long and often daunting process. So keep tweaking the pitch and move on to the next meeting.

Most of all, never forget that overcoming adversity is the mark of a true entrepreneur.