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Tactical Mistakes of First-Time Entrepreneurs
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Experienced investors constantly examine the business plan of a number of entrepreneurs in order to gain a better understanding of their business ideas and objectives. Often times, investors can notice certain tactical mistakes that many first-time entrepreneurs tend to make. These tactical mistakes often blur the message of the business pitch and, at times, even confuse prospective investors. First-time entrepreneurs, unlike serial entrepreneurs, are often naïve in their approach and thus, lack considerable business experience. Although first-time entrepreneurs put their utmost efforts in understanding the dynamics of raising money and heading companies, their lack of real world entrepreneurial experience undermines the effectiveness of their business plan presentations.

Entrepreneurs should treat their business pitch similar to a sales process and clearly understand that the goal of the first meeting with an investor IS NOT to get a funding commitment but to win them over in order to establish a solid relationship, and possibly, to secure future meetings. It is essential that entrepreneurs do not commit the following tactical mistakes:

Business proposition should be clear
First-time entrepreneurs often make the mistake of not clearly stating WHO their customers are, WHAT problem is being addressed, and HOW the company can solve the problem. Although experienced entrepreneurs rarely commit this mistake, it is the first-time entrepreneurs who pitch their ideas in such a way that investors have difficulty in understanding the business proposition even 30-minutes into the meeting. Although there is some benefit in explaining the context before putting forth the value proposition, an entrepreneur should take time into consideration and get to the point in a timely manner. This is very important since most investors expect a crisp and precise value proposition.

The time and pace of the pitch is important
The time at which an entrepreneur can clearly communicate his/her idea in order to raise capital for their venture is during their business plan presentation. Therefore, it is vital that the entrepreneur spend a considerable amount of time on each aspect of their business plan. Spending too much time on introductions and providing unnecessary talk during the presentation greatly distracts from the opportunity to convey the primary business idea. Likewise, mid-stream questions are helpful in allowing an investor develop a better understanding of the business proposal, but the entrepreneur should spend less time on irrelevant topics and communicate only the important ones in his/her full agenda. An investor’s mind may drift during boring and confusing presentations, and the entrepreneur should refocus the conversation into more important aspects.

Demonstrations or presentations that do not work
Most entrepreneurs will present their ideas and demonstrate their prototypes/services during their business presentation. It is quite essential that entrepreneurs use their time as efficiently as possible during the presentation, especially when switching between their verbal presentation and prototype demonstration. Since time is of the essence, entrepreneurs should set up their equipment, connect their laptop to a projector, and setup the prototype demonstration, even before the meeting begins. Providing hand-outs to the audience members will not only allow the spectators to follow the presentation in an orderly manner but will also serve as a back-up hard copy of the business presentation. Entrepreneurs are encouraged to resume their business plan presentation should technical difficulties occur, such as equipment and prototype failure. Remember: An entrepreneur who appears worried about technical mishaps may present the wrong message to the investors.

Entrepreneurs should research the audience
It is important for the entrepreneurs to be familiar with the audience before they present their pitch. Every entrepreneur should diligently research the particulars of each audience member, especially if they happen to be investors. If the entrepreneur pitches to a venture capitalist firm, s/he should research the individual partners of the organization as well as the specifics of the VC firm and how knowledgeable the firm is of the entrepreneur’s target market. Likewise, the entrepreneur who is “pitching” their idea to angel investors should know previous and existing investments of the investor and then tailor what s/he presents based on this information. When a meeting is confirmed, entrepreneurs should ask the investor about the particulars of the audience who will be attending the meeting. Although the individuals that attend the meeting may change, the initial answer will serve as a guidepost.

Follow-up
Regardless if a presentation went well or not, it is very important that entrepreneurs follow-up with the primary investor a few days after the business presentation. Entrepreneurs are encouraged to write a letter to each investor, via direct mail or by e-mail, or even make a follow-up telephone call thanking the investor for taking the time out to attend and listen to their business proposal. It usually takes investors (angels and venture capitalists) a few days to research the idea that the entrepreneur presented. By following-up with investors in this manner, the entrepreneur will gain credibility for personalizing their notes and phone calls. It also shows investors they are truly serious in taking their business ideas forward.

Ethics and professionalism
A major requirement for the survival of an entrepreneur and his/her business is not the ability to successfully raise startup capital but to present his/her ideas in an ethical manner. Any attempts to embellish the facts about their business idea(s) or their own individual backgrounds will be either immediately recognized or discovered later in the due diligence process. Investors are very particular about the entrepreneur’s ethical and professional conduct and do not want to fund an entrepreneur who is untruthful in their approach. An entrepreneur should present his/her business ideas in the best possible way but should never be inclined to grossly exaggerate.

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