We stood in front of the legendary Dragons for a straight two and a half hours, answering question after question. The result of this was the third biggest Den investment of all time, and the biggest in seven years.
So what’s the secret It can basically be broken down into these four areas:
1. Pitch a business, not an idea
Everyone has ideas. But if you can’t get it past this stage, the investor doesnt care what you have to say. By the time you encounter your first potential investor, you need to have taken the idea to as far a position as possible – spending all of your spare hours and money on it – until you need investment.
Showing an investor that you have actual sales as a result of your efforts to date is a bonus as it proves you have a track record (investors love track records) showing that you have transformed your idea into an actual business! Most investors arent interested in helping in the day-to-day operations of your business, so if you can’t get your business past the idea stage, you will find it hard to show them that you can do this without them.
2. Business plan
I cannot stress enough the importance of business plans. The amount of ideas that we have changed or scrapped after writing a business plan is astounding. You need to write a concise, 15 page plus business plan, which details your research of the market opportunity, analysis of trends, analysis of competition and your own break even analysis.
You need to empirically prove to yourself that the business will work. Only if you can look at your business plan from a neutral stance, and decide that the concept will work, will you be able to convince investors that it will work. The other advantage of this stage is that you will answer to yourself most of the questions that they will ask you. If you lack the ability to self critique your business, you need to find a sounding board in an experienced person. Facing some good old fashioned honesty beforehand will make facing any investors that little bit easier!
3. Know your s**t
You need to live and breathe your business. You should be doing this anyway, but at least do it pre-pitch. With this, you will know every single fact and figure asked of you every potential competitor, every potential flaw and potential opportunity for your business. Learn them religiously. Nothing is worse than forgetting your projected figures.
Dont be surprised if the investor is irritated that you dont know your potential profit – this is your big target and this is what makes them tick. Not knowing what lies on the horizon for your business shows you dont care.
4. Be the boss
The final thing you have to know is that an investors decision is based equally on your concept and on you. You need to prove to them that the concept will work and that, in tough times, you will be the one to drive the company through.
So by now, you have proven to yourself that your concept will work, that you know everything about it – and that you are the right one to be in charge when the going gets tough. All you need to do now is to get that across to the investors. So grab their attention with a powerful speech, answer all of their questions with confidence, and be resilient if they criticise you.
Respect their experience and always remember that if you’ve done your homework you’ll be able to withstand whatever they have to throw at you. Although make sure you keep an eye out for those sneaky investors that are just belittling your business to get a higher equity stake (Im looking at you Peter Jones ).
Rob Tominey is co-founder ofMainstage Travel. Check out Mainstage Travel and follow Rob and his business partner Aden on @robtominey and @adenlevin.