The elevator pitch is one of the most important elements in starting your business successfully. Picture this: you are searching for funding for your new business, taking an elevator from a big meeting when in walks Donald Trump. What do you do? Do you freeze up when he asks you what you are doing here or do you nail him with a perfect pitch, snag his business card and score a meeting?
Here is a guide to the several core elements of the elevator pitch. This is not your “commercial” and is not a sales pitch. That can be crafted from this, but this serves as a professional pitch with the purpose of raising investment for your business. This is a pitch for your company, not what you are selling. Tell them why your business will be successful.
This pitch needs to be short and to the point, because by the time the elevator stops, you’ll need to have completed your pitch!
Step 1: The Hook
First you’ll need to grab your audience’s attention. Why should they care? If they are an investor they’ve heard dozens of pitches this week. How will yours stand out from the crowd and get a call back? You’ll need to appeal your audience by speaking directly to their problem. Try asking them a question or strike them with humor to get them thinking or warrant a response.
Example: Do you remember how much time and money you spent struggling to start your first business?
Step 2: The Problem
Every business needs to solve a problem. The best businesses are born out of necessity, where the entrepreneur found a problem in their life or business and figured out a product or service that would fix this problem for others. Make this perfectly evident in your elevator pitch and score extra points if you phrase it in a way your audience can relate to.
Example: Young people who have business ideas often don’t know where to start and have no place to go for simple, straightforward advice.
Step 3: The Solution
Now that you’ve set yourself up, it’s time to solve that problem. What does your business do? You should present the name of your business in this step. How can your business help your market?
Example: Under30CEO.com gives people the tools and resources to start their business with less money and fewer mistakes.
Step 4: The Market
Your audience wants to know who you are going to sell to and how large that market is. Basically an investor will want to see how big the opportunity is to make money. Don’t just throw a big number in there and say “the enterprise creation industry is a $50 billion industry and we plan on capturing 1% of it”–you will get accused of pulling this number out of the sky.
Example: Every year 600,000 businesses are started in America and Under30CEO aims to help the best and the brightest young people in the world.
Step 5: Revenue Model
Next your audience will want to know how your business plans to capitalize off that market? In other words, how does your business work/make money? Is it an e-commerce site? A service? Retail? Explain.
Example: Under30CEO.com will publish expert advice, interviews with the most successful young entrepreneurs and offer discounts on services to help small business owners. The site will generate revenue from advertising and referral fees we negotiate from our most trusted vendors.
Step 6: Competitive Advantage
Why will your company succeed and what will be your secret to success? Investors want to know what competition exists and how you plan to differentiate yourself. This is your time to explain why there is room in the market for your product/service.
Example: Under30CEO’s competitive advantage is our ability to connect with our audience and truly further our mission to help every young entrepreneur on the planet. We have created evangelism for our cutting edge brand with students and young professionals across the nation through speaking engagements and events and globally through social media.
Step 7: Management
So by now your audience should believe in your product, but why should they bet on you? Who’s behind the product and why will your team be successful? Investors want to know your track record and want to see passion for your business. It’s better to have an “A team” and a “B idea”, than a “B team” and an “A idea”. Prove your credibility!
Example: Our founding team includes two young entrepreneurs who know just hard it is to start a business for the first time. Matt Wilson and Jared O’Toole have been featured everywhere from Entrepreneur to The Wall Street Journal, have 4 years experience running the world’s #1 Collegiate Entrepreneurs’ Organization and consult for digital marketing clients across the country.
Step 8: Finances
Investors want to know when you will be profitable, how long it will take you to make money and how much money you can expect to make. Investors know that these are just estimates and that when you are in a startup you really can only go by your best guess, but don’t tell someone you are going to make $10 million in your first 6 months or you’ll be laughed at.
If you are already profitable tell them how much money you are making and how their investment will help you create more profits.
Example: Under30CEO has been profitable for X months and has made $xxx,xxx in advertising and revenue sharing profits. The company plans on creating revenues of $x,xxx,xxx by the end of 2011.
Step 9: What is your exit strategy?
Your investors want to know how they will cash out on their investment. Are you looking to sell the company? IPO? Merge with another company? What are your goals?
Example: Under30CEO hopes to become a target for acquisition in the next 3-5 years by a larger media company or business lead generation company who can benefit from our targeted audience.
Step 10: The Ask
Be sure to tell your audience what their investment will be used for. This is your time to close the deal. If you want a business card, an investment or to set up a meeting you’ll need to prompt them and ask. Be as specific as possible with your ask especially if it is for money. Be direct when closing the deal.
Example: We are seeking investment of $xxx,xxx to hire a full time developer, sales team and upgrade our Manhattan office space.