Entrepreneurship

Seven Deadly Sins of Pitching

There are certainly more than just seven mistakes that you can make when pitching to investors, but these seven could definitely be the nail in the coffin that prevents you from getting a deal.  An entrepreneur that makes any one of these seven is demonstrating a lack of experience as well as a strong naiveté.  Don’t be that entrepreneur.  Avoid these seven deadly sins at all costs.

 

  1. “We only need X percent of the market to be successful.”

This phrase, whatever the percentage may be is probably one of the biggest red flags there is. I cringe every time I hear it.  What is mind boggling is that so many entrepreneurs do it.  Why? Because it requires no thought.  Saying the market is a $100 million market so we only need to tap into 1% of the market in order to have $1M in revenue is not only unrealistic, but plain lazy. Just because a market is large in revenue size does not mean it is easy to obtain market share.  For simplicity’s sake, here is an example. Let’s say a company like Microsoft controls 99% of the $100 million market. How difficult is getting that 1% now when it is made up of hundreds of other startups.

 

  1. “Our primary strategy will be word of mouth.”

It saddens me how often I have to explain this, but building something pretty and hoping people talk about it is not a strategy. “If you build it, they will come” only works in corny Kevin Costner movies.  If word of mouth is a part of the equation, you should tell me about how you are going to encourage it to happen (such as a referral program), not that it is just magically going to happen. I should also add that if you say your strategy is social media, it is the same thing as saying our strategy will be advertising.  Social media is a tool, not a strategy.

 

  1. “Our financial projections are extremely conservative.”

Experienced investors generally will take any initial pro forma financial statement and double the costs and double the timeline to a positive cash flow. Financial projections, no matter how detailed and researched they may be, are estimates. They do not reflect the actual future, but your best guess at the future. Saying they are conservative are like a “duh.” Just call them financial projections and be sure you have assumptions for all of your numbers. Investors know you think they are conservative. The honest truth is, every time they hear the word conservative, they laugh a little on the inside.

 

  1. “We have no competition.”

No matter what industry you are in, no matter what you are selling, and no matter who you are selling it to: you have competitors. If your customer can spend their money on anything other than what you are selling – that thing is your competition. Especially in this day and age, simply getting attention is difficult enough. In reality, whatever gets your customer’s attention away from you is competition. Instead of spending your energy telling me how you have no competition, spend the energy showing me how you are going to get my attention.

 

  1. “We provide the highest quality at the lowest cost.”

This statement indicates that you simply do not understand revenue models or how they work. If you are going for highest quality, you are assuming that you are creating some added value along with your product or service. If this is indeed true, customers should be willing to pay for that added value. On the flip side, if you are trying to be a low cost provider, that indicates that you are going for a no frills model because your research shows that your customers will pay for the basic service or product because they do not value the extra features that ultimately add to the price. Saying you are going to both is a contradiction. You can certainly pitch a new operating model that offers the same quality at a lower cost – but avoid saying you will provide the highest quality AND the lowest cost.

 

  1. “Our product/service sells itself.”

This goes back to saying you just need X percent of the market.  No product sells itself.  Whenever I hear this expression I picture a cartoon version of the product sitting in a box in a warehouse and deciding it is going to sell itself.  It climbs out of the box and travels to the nearest store and sits on a shelf and begs passing by customers to buy it.  Products and services only sell themselves in a fantasy land.

 

  1. Reading any part of your pitch

 If you don’t know your product or service pitch inside and out, you either don’t care enough or aren’t comfortable in your own sales skills.  Either way, I’m done listening.

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