Shark Tank Jump Start Your Business: How to Launch and Grow a Business from Concept to Cash (12 page)
Authors: Michael Parrish DuDell
In the previous chapter you learned how crucial it is to know your numbers, and that’s especially true when it comes to pitching. Even if you don’t consider yourself a “numbers person,” a potential investor will want to know that you have a sound grip on your company’s financials. Don’t forget, if you do score a deal, you’ll be playing ball with the investor’s money. He’ll want to make sure you know the game.
And finally, you should have a reasonable idea of where your business is headed. Investors don’t expect you to walk in the door with a wildly successful, hugely profitable company. If that was the case why would you be there in the first place? What they want to see is that you have a sound and realistic plan to grow the business. Anyone can start a company; what they’re looking for is vision and your ability to execute. Only once you feel like you have these necessary pieces of information in place should you think about pitching.
When it comes time to pitch your business, your information and presentation should be seamless and polished. Here are a few ways to create a better pitch:
Know your audience:
Who exactly are you pitching to? Are
you speaking with a large investment firm or with a single angel investor? Maybe you’re pitching to a good family friend. While every pitch can have the same basic information, the presentation should be tailored to the audience receiving it.
Start off strong:
Investors hear pitches all the time, and you don’t want to lose them before you’ve even begun. Craft an opener that’s compelling enough to grab their attention from the start.
Keep it simple:
Just because the investor may understand
business
doesn’t mean she will necessarily understand
your
business. Avoid using a lot of industry jargon or making the business appear too complicated. A simple and concise pitch will serve you better than one that’s confusing or convoluted.
Tell a story:
While it’s important to stay focused, you don’t want your pitch to be dry. Tell a compelling story about the problem you’re trying to solve and the market opportunity you wish to seize. Data is vital and you should be able to back up your idea. But don’t underestimate the benefit of storytelling.
Humanize the experience:
You started this business for a reason, right? If you believe in what you’re doing—and you should—let that passion come through in your pitch. If you’re funny, be funny. If you’re excited, be excited (to a degree). Yes, you should be professional, but don’t be afraid to also be human. Remember, this is a partnership, and the investor is interested in getting to know you as much as he is interested in getting to know your business.
Avoid exaggeration:
If your company grossed $150,000 last year and you’re projecting $20 million next year, you better be able to back up that forecast with data. It’s easy to rely on exaggeration and hyperbole when trying to impress an investor, but be wary of going down that path. Nobody wants to work
with someone who’s out of touch. Optimism is encouraged, but only if it’s grounded in reality.
Stay on your game:
There are a hundred different things that can go wrong during a pitch: your slides don’t work, you forget an important piece of data, the investor loses interest. If something happens and you need to take a second to regroup, take it, but don’t let a hiccup ruin the entire pitch.
Be ready for questions:
After your pitch is over, the investor will most likely have a handful of follow-up questions. This is where all that knowledge about your target market, competition, and financials really comes in handy. Prepare yourself for as many different types of questions as you can. Rest assured that if there’s something about your business you’re trying to hide, the investor will eventually uncover it. It’s better to be uncertain than dishonest.
Practice, practice, practice:
While the greatest pitches may appear smooth and effortless, you can bet that plenty of work goes into their preparation. In fact, the most seamless pitches are usually the ones that require the most practice. Devote as much time as you need to fine-tuning your pitch. Practice in front of a mirror; practice in front of friends; practice in front of strangers if they’ll let you. The more work you put into the preparation, the more likely you’ll be to secure an investment.
| “The best pitch isn’t a pitch. It’s an honest pre sen tation of what you are going to do, how you are going to get there, and why it matters.” |
How many times have you heard this story: An entrepreneur has a great idea and decides to start a company. Unable to receive funding from the bank or outside investors, the newly minted business owner bootstraps his way to success by using personal credit cards to launch the venture. And then, just as he’s maxed out his last card, the business takes off and his investment is paid back. Sound familiar?
Statistics cited by the U.S. Small Business Administration show that over 65 percent of all business owners use credit for business purchases. But here’s the scary part: only 50 percent of that is business credit—the rest is personal.
Securing a line of business credit isn’t as easy as it once was, especially if your business has yet to bring in any money. And while personal credit cards can most certainly help an entrepreneur build a business—even the founders of Google initially funded their company with credit cards—you must understand the seriousness of using personal credit to fund your business.
Assuming you’ve incorporated as either an LLC or corporation, your personal finances are subject to a certain level of protection. However, if you use personal funds to finance your business, and that business fails, you are left with the debt. What’s more, a credit card company can choose to reduce your credit limit at any point, potentially eliminating your primary source of funding.
You should only use credit cards as a financing tool if you feel as though you’re responsible enough to make regular payments and willing to take the risk. And be sure to keep spectacular records, so you can legitimately and thoroughly reimburse yourself when the business begins making money. Because here’s the thing: the story about the entrepreneur starting her company with the credit card isn’t a myth. It’s only the last part where things get dicey: the happy ending.
BIG IDEA: Fresh Maine lobster available through an LA-based food truck or delivered nationwide.
INVESTOR: Barbara Corcoran
When Cousins Maine Lobster founders Jim Tselikis and Sabin Lomac walked into the tank, they’d only been in business for three months. But you never would have known it from watching their pitch. Determined to land a deal, the food truck owners came up with a plan: in the weeks leading up to the taping, Jim and Sabin rewatched all the previous seasons of
Shark Tank
and wrote down every question that had ever been asked. Working together, they prepared two answers for each possible question. The result of all their hard work was a deal with Barbara Corcoran.
“These guys are perfect role models for other entrepreneurs,” says Barbara. “It’s not just about having a great pitch. The people who walk away with a deal are the ones who are the most prepared.”
Preparation is nothing new for Jim and Sabin. When the cousins first started their company, they were met with an immediate challenge: they lived on different coasts. Not only did the lobster-flinging duo have day jobs to consider, they had to compete with a taxing three-hour time difference.
“It may not sound like a lot, but it was,” says Sabin. “Working a day job and starting a company is hard enough without your business partner living three thousand miles away.”
But location wasn’t the only challenge Jim and Sabin faced. This was their first time starting a company together, so they had to learn how to transform their relationship from one of family members to one of business partners.
“Before we got into this, we had to assess everything,” recalls Jim. “There are so many issues that can come up when running a business. We didn’t want anything to tarnish our relationship as family.”
So the cousins decided to do what they do best: prepare. Before starting the company, Jim and Sabin took a series of personality and behavioral assessment tests to discover more about how they’d work as a team.
Among many things, the tests revealed that Jim and Sabin handle conflict very differently. Jim prefers to push through a challenge, while Sabin is more apt to find creative ways to get around it. Those insights have played a crucial role in how they’ve run the business.
“Knowing those things from the beginning took away some of the day-to-day surprises that come with running a company,” says Jim. “Business is like a marriage. The more you know about your partner, the better it will be.”
So how is Cousins Maine Lobster doing today? After appearing on the show and making a deal with Barbara, the company experienced incredible growth. Between launching another food truck, opening a pop-up restaurant, and running a busy e-commerce store, Jim and Sabin have found tremendous success—and they’ve only been in a business for one year.
“There are still a lot of things that Jim and I don’t know,” says Sabin. “Some people are too vain to admit it, but we’re very open and honest. We’ve always been very eager and prepared to learn. We’ve had to be.”
To find out more about Cousins Maine Lobster, visit Cousins MaineLobster.com or follow them on Twitter @CMLobster.
REAL-WORLD WISDOM: “You have to know everything about your particular business. A lot of people are too proud to admit when they don’t know something, so they decide to ignore it instead of actually learning. That never works. As an entrepreneur you need to be hyper-curious about your business and your industry.”
