Friday, July 12, 2013

5 Tips to Pitch Investors the Right Way

5 Tips to Pitch Investors the Right Way

Link to Small Business Trends

5 Tips to Pitch Investors the Right Way

Posted: 11 Jul 2013 04:00 PM PDT

pitch investors

It's that time – you have to pitch in front of a prospective investor, convince them and get the necessary funds for your startup. This can be a great experience or your worst nightmare. Everything depends on how you prepare for it.

Let's take a look at the points that can make the venture easier for a new entrepreneur.

5 Tips to Pitch Investors

Do Your Homework

The investor you face may have a minuscule knowledge about your field of work or they may be an expert. Whichever category of financiers you face, they expect you to have knowledge of every aspect of the business.

Typically, an investor looks for pitches to convey answer to basic questions:

  • What problem do you solve?
  • Who are you?
  • What have you done until now?
  • How do you plan to make money?
  • How can the investor help?

If your startup is about selling computer applications and you have no knowledge about the information technology industry or don't have a business plan, an investor may not feel confident about putting their money on you.

You need to have mastery over all details about your business, your industry, your competitors, your budget and your objectives. If you fail to provide a definitive answer, an investor may not be impressed with your pitch.

Memorize Specific Details

An incompetent entrepreneur says that their business can generate savings for customers. A competent entrepreneur says that their business can generate savings worth $100 for customers.

The easiest way to distinguish a good pitch from a bad one is the way you make it. If you are vague, investors may not think of you as an ideal candidate to invest their money in.

Definitive answers always work best. Be prepared with facts and figures. Whether an investor knows all or nothing about the field, they will be impressed if you have clear-cut points and explicit answers.

Have a Story

Your pitch before an investor is not about rattling off key statistics. Almost all entrepreneurs can memorize and deliver a speech. The problem is – it will fall flat and fail to impress anyone if it's not connected to you.

A pitch is only a good one if you can relate to it. This becomes possible if it is associated with your life. If you are impersonal about the endeavor, chances are high that the investor will be able to sense your lack of interest.

An investor is not automated. He/she is human. Like every human being, he/she will be more interested in your ideas and knowledge. He/she will only feel enthused about your business concept if you yourself are excited about it.

A simple trick – practice your presentation in advance. If possible, record it. This will help you evaluate your presentation and modify it to make it attractive.

Hone Your Communication Skills

On the personal front, you may have excellent communication skills. However, you need to make sure that your business communication skills are also appropriately perfected before you make the pitch.

Many times, an entrepreneur fails to make an impression on an investor because he/she tries too hard. If you are too formal or too serious, or perhaps too much of a flatterer, things may not turn out the way you wish.

Pay attention to what you say. Pay attention to what the investors ask. Be respectful. Be friendly. The prospective investors you face today may become the solid foundation for your business tomorrow. Treat them the way you would like to be treated by business associates.

Be Open to Feedback

A know-it-all attitude conveys the wrong message to an investor. When you are a new entrepreneur on the lookout for startup funds, you cannot afford to send such a message out.

Keep in mind, every entrepreneur learns throughout their journey from a startup to an established business. Your pitch to impress investors may be very good; however, there is always the opportunity for improvement.

If an investor asks something you don't understand, politely ask them to explain the question. If they have something to say about your pitch, listen to them carefully. You may learn a lot from experienced investors but only if you have the right attitude.

An investor is human. You can create and nurture a good business relationship with them if you have the right approach. Remain coachable as it will ensure that you continue to learn new things about your area of business from these pros.

The key to success is to be prepared and be yourself.

If you have a mentor, practice your pitch before him/her. You may also get help from a career coach. If you know someone who has pitched in front of investors successfully, ask them for a review of your pitch.

Business Pitch Photo via Shutterstock

The post 5 Tips to Pitch Investors the Right Way appeared first on Small Business Trends.

Customers Via Social Media Are Less Profitable Than Those From Search

Posted: 11 Jul 2013 01:30 PM PDT

customers social media

If you run an e-commerce business, you should know that how a customer finds your site makes a difference in how much they spend with you.

A recent study by Custora, a predictive analytics platform for e-commerce marketing, says customers that find your site through search engines provide the greatest lifetime value (PDF), 54 percent above average.

That’s just a fancy way of saying that these customers will spend more at your online store over a longer period than other visitors who might make only a single purchase and never return.

CPC and Email Also Effective

Other high performers as far as delivering customers of above average lifetime value to your e-commerce business are Cost Per Click advertising and e-mail marketing, the study said.

Customers reaching your site through Cost Per Click ads represent 37 percent above the average lifetime value to your website.

Meanwhile, e-mail marketing delivers customers who are 12 percent above the average lifetime value to your e-commerce business.

Social Media Lags Behind

And where did social media place in the ranking based on the Custora study?

Well, not too high, as it turns out. For all the fuss made over social media, customers visiting from these sites can actually represent relatively low lifetime customer value for e-commerce.

In fact, Facebook visitors represented only 1 percent above average customer lifetime value for e-commerce merchants. Worse yet, the lifetime value of customers acquired through Twitter was 23 percent below average.

Conclusions

So does this mean social media marketing has no value to e-commerce businesses at all? Gary Shouldis of 3 Bug Media doesn’t think so:

No, it's just that marketing to people on social media is usually a top of the conversion funnel activity while search and PPC customers are usually at the end of that conversion funnel, with wallet in hand. Understanding where potential customers are in the buying cycle is important when creating your marketing plan.

Using Google Analytics tools, Custora conducted the study by looking at 85 retailers and tracked about 72 million customers who were making purchases online.

Image: Custora

The post Customers Via Social Media Are Less Profitable Than Those From Search appeared first on Small Business Trends.

UpCounsel Gets Laywers to Bid for Your Business

Posted: 11 Jul 2013 11:00 AM PDT

upcounsel

Legal help for a small business owner can be quite a financial setback, no matter how necessary the help may be.

A new Web service allows small businesses to pay for just the services they need from an attorney. UpCounsel, which launched last year, lets attorneys submit quotes on specific services posted by small business owners an others. Gigaom compares the service to TaskRabbit, a site that allows part-time workers to bid online for various tasks and errands posted by members.

As with TaskRabbit participants, attorneys working on UpCounsel are screened before being permitted to participate. In addition to a quote on the particular service posted, attorneys are permitted to post a brief personal message to help clients make up their minds.

In a post on the official UpCounsel Blog, co-founder and CEO Matt Faustman explains the rationale behind the service:

We at UpCounsel saw some problems in the market for legal services – especially for those offered to small and mid-sized businesses.

Faustman, a former practicing small business attorney, said he’d been inspired to found UpCounsel after an experience with two startup entrepreneurs who, he said, had taken a DIY approach to legal documentation when setting up their company.

Faustman said the pair had used a well-known online legal document service to set up their company with disasterous effects. The business’s set up turned out to be all wrong costing the partners thousands in legal bills just to fix the problem.

He said UpCounsel was created to addressed a specific issue. Small business owners cannot afford the costs of legal fees, especially when starting out, and resort to doing many of the legal tasks themselves to cut costs.

Current online resources of legal information are sometimes lacking and following their advice can sometimes lead to additional problems, Faustman said.

Image: UpCounsel

The post UpCounsel Gets Laywers to Bid for Your Business appeared first on Small Business Trends.

Pros and Cons of Offering Discounts for Paying in Cash

Posted: 11 Jul 2013 08:00 AM PDT

Sponsored Post

Discounts for paying cash

By now you probably know that, as a merchant, both the law and credit processing agreements allow you to offer discounts to customers who pay in cash.  So why wouldn’t you offer such a discount?  Who doesn’t love cash?

While cash has its advantages, there is a downside to consider.  We'll show you both sides of the coin.

The Pros

The upside to cash is pretty straight forward:

  • Keep all of your money.  It's clear:  with cash, you avoid credit card interchange fees.  The cash you take in is the cash you keep.
  • Everybody loves a discount.  Customers appreciate a discount and some may be more likely to return to your business to take advantage of the savings.  Plus, you're providing consistently card-wielding customers an incentive to start paying in cash.
  • A discount is sometimes the difference between a sale and no sale.  Especially for big-ticket items, the savings could be enough to make a customer run to their ATM.
  • Differentiate yourself from big box stores.  If you're a small business, offering  discounts for paying in cash is one way to compete with bigger, well-known competitors.

The Cons

Here a few reasons why you may not want to encourage cash payments:

  • Cash is riskier.  More cash on site means a greater security risk. It's also a lot easier for cash to go quietly missing from your drawer.  Ask any business owner who's had a sticky-fingered employee counting their register each night.
  • People spend more when they pay with a credit card.  There are a number of studies out there that all point in the same direction:  we spend more when we are handing over a credit card instead of cash.  If a customer is not limited to what's in their wallet, adding a few extra purchases to their tab is much more likely.
  • Cash can be costlier to your business. The costs of dealing in cash are hard to quantify.  Credit card fees have a definite number attached to them, so you know what it's costing you to handle credit card payments.  With cash, those costs are less concrete. But make no mistake, transporting, counting and preventing cash theft all come at a cost.
  • You could anger or lose card-carrying customers. Offering discounts for paying in cash can just as easily be viewed as a surcharge for paying with credit.  That perspective can lead to unpleasant surprises at the register for card-carrying customers.  Customers caught without cash and unaware of your cash discount offer could become annoyed that they have to pay more, just because they need to pay with plastic.  Which is also related to the next point:
  • Credit cards are more convenient for customers. More and more people are paying with plastic and generally expect the option to do so without penalty.  Considering the point made above, is it good customer service to “add a surcharge” for credit card payments?  Your card-carrying customers are not likely to think so.

Consider all sides of this important issue, and remember to view it from the perspective of the customer.   You know your customer:  what would she or he prefer?

For those of you looking for more information on accepting credit and debit cards, check out Community Merchants USA. This online resource includes a plethora of information to help you add more value to your business through credit and debit card acceptance.

 

Shutterstock: Paying at register

The post Pros and Cons of Offering Discounts for Paying in Cash appeared first on Small Business Trends.

If You Want Entrepreneurial Success, Learn to Embrace Failure

Posted: 11 Jul 2013 05:00 AM PDT

entrepreneurial success

First off, let me tell you this: I fail – a lot… and I’m ready for more failures. Before you say, “Are you out of your mind,” let me explain a bit.

I hate the feeling of failure.  Nobody likes to fail.  But I learned during my entrepreneurial career that if you want to achieve entrepreneurial success, you need failures. You need to fail and the more you fail, the closer you are to your goal.

Embrace Failure to Reach Entrepreneurial Success

I’d like to illustrate this in the game of basketball.

Do you know why Miami Heat won the NBA 2013? No, it’s not because of the LeBron James.  Of course, it’s a team game, so everybody contributes.  However, there’s a tipping point which has changed the course of the game: Ray Allen’s 3-point shot.

I’m a fan of Ray Allen.  Ray is a seasoned NBA players, with 17 years of NBA experience under his belt; he was a superstar, but he has passed his prime years. He is a clutch player, meaning on crucial moments in a basketball game, he will most likely to be the go-to player to take the final shot. I’m sure Miami Heat hired him due to that reason among some others.

It’s not easy taking the final shot. Only a few NBA players have the mentality to do it.  It’s nerve-wrecking, especially when the destiny of your team is within your hands – literally.

Shooting the last basketball (called a buzzer-beater,) Ray made some and missed a lot.  Again, it’s not easy.  But this time, when Miami Heat was on the brink of losing the NBA Finals, Ray made a three-pointer a second before the game was over. The game went into an overtime and Miami won the game – and go all the way by winning the next game to grab the title.

The Moral of the Story?

When you see opportunities, you need to give it a go. When you fail, try and try again.  Before you know it, you are used to taking risks and when you are used to the fail-and-try-again cycle, eventually you will make it – big time.

You see, entrepreneurship is not about finding success on your first try.  Entrepreneurship is about finding success through a series of failures – the faster you fail, the faster you will find success.

Why Do I Need to Fail?

The answer is: You don’t NEED to fail. However, in entrepreneurship, you WILL fail in one way or another. That’s how things go.

An entrepreneur I know told me that he was willing to go through many failures for just one success. Why? Because he has proven time and time again that the successes he achieved were well worth the failures.  He’s ready to fail 100 times for that 1 success – and he’s ready to fail more.

The guys in Silicon Valley know it very well: They embrace failures – pretty much in the similar line of thinking.

Here’s another one for you: Thomas A. Edison, the inventor of light bulbs, once said in his epic quote:

I have not failed 1,000 times.  I have successfully discovered 1,000 ways to NOT make a light bulb.

So, do you want entrepreneurial success?

Well, get ready to fail – and make sure you learn something from every failure you’ve experienced. Otherwise, failures will be – well, failures.

Miami Heat celebration Photo via Shutterstock

The post If You Want Entrepreneurial Success, Learn to Embrace Failure appeared first on Small Business Trends.
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