Are you selling a product or selling a business?
Is there a difference between selling your product or selling your business and more importantly, is that difference critical when pitching for funds to fuel your start up? IMHO, Hell Yeah!!!
Having sat through numerous pitches as a judge for Business Pitching contests, the most irritating and frustrating thing I face is sieving through an entrepreneurs pitch to understand their business model. In the few minutes they are given to pitch, we judges have to understand their business and grasp the potential of their business. Finally, we have to decide if an infusion of capital can realise that potential.
The challenge I’ve encountered in my 6 years of judging, is that almost all of the pitches revolve on their product, service or idea, the costs involved in getting it to market and the potential earnings from that product once funding is secured.
An atypical pitch would be something like this:
Their Current Situation or Problem Statement
“Hi, I make cupcakes. From home. Currently I can produce 100 cupcakes in a month. My cupcakes are popular and I can’t meet demand.”
Their Product/Service/Idea and Customer Validation (if any)
“Cupcakes are popular for all occasions from just a simple tea to birthdays and weddings. I cater for parties. And this is how much I have made so far.”
Then the solution and how they will earn money
“I need X dollars to buy more baking equipment so that I can triple my production which will bring me Y amount of revenue.”
Personally, I would rather not invest in businesses that pitch this way. However, in contests where a winner must be picked, pitches like this make the contest a contest of who’s product would benefit the most from an influx of funds.
The contest to identify and reward an innovative and unique product/service/idea becomes a product comparison contest. A comparison of features and cost and who’s business would the new capital impact the most.
How you pitch and what you pitch (product or business) gets pretty critical especially in contests where pitches of similar type products are heard.
Now, if the pitching entrepreneurs, understood what their business was and pitch their business model instead, I truly believe that it would make for a more exciting and vibrant entrepreneur eco-system not to mention, contest.
In addition, the entrepreneurs themselves would have a better grasp of their business and the challenges and opportunities ahead.
What would a Business Pitch by an enlightened entrepreneur look like then? How would it sound?
Let’s go back to the previous atypical example. And let’s hear the pitch from a Business aware entrepreneur.
“Hi, I am in the business of creating memorable experiences for occasions with personal significance to my customers.
I do this by creating unique, eye catching and memorable cup cake designs based on their chosen themes or our suggested themes. Currently, I achieve this from my home bakery and my capability is limited to the equipment at hand.
My production is 100 cupcakes a month and am looking to raise funds to increase my production capacity to meet current demand and to offer customers, more memorable cupcake centred memories.”
A pitch like this, would indicate to me that this entrepreneur has a better grasp of what makes their business tick.
Its how they can make a memorable cupcake centred display/taste/theme for that special occasion (USP).
In addition, they understand that their business is to help their customers make their significant occasion, memorable. This should enable them to be conscious of other potential channels and/or products that could help them achieve the same. (Key Success Factor)
For example, they might be conscious that memorable occasions should be recorded, and they could add on professional photography services(capture memorable moments), or create one-off t-shirts (with the special occasion on the front) and so on. Ultimately, their business would be one to assist the customer in making an important occasion, even more memorable.
“We are also keen to roll out other add on services such as (insert other “memorable” services here) to help our customers truly enjoy a memorable occasion.”
If these potential “add-ons” were also added into their pitch, as a path forward, then this would make for a complete Business Pitch instead of just a Sales Pitch of a product/service/idea.
Salesmen who are good pitchers can be successful, but an entrepreneur combining a clear business plan with strong salesmanship, would set that entrepreneur apart from the rest.
And in any contest, any edge you can get over the others, could mean the difference between being funded or not.
So check your pitch. Are you a Salesman or are you a Businessman?
(First posted in Medium)
