Top 10 Mistakes Entrepreneurs Make When Pitching To Investors

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From the very beginning of a startup, most entrepreneurs have to pitch their business idea to potential investors or partners in order to get business funding or support. Most small business owners are inexperienced when it comes to delivering the perfect elevator pitch. Whether due to poor planning, inadequate preparation or poor execution, it doesn’t take much to turn a business pitch into a complete fiasco.

So we decided to compile a list of the Top 10 common mistakes startup entrepreneurs make when pitching their business idea to investors.

1. Not keeping the time. Most people are guilty of assuming that they have all the time in the world to pitch their business idea to a potential investor. When pitching your business to an investor, it is good for you to understand that most of them have other pressing matters, whether personal or business related to take care of. An investor is not expected to spend the better part of his or her day listening to you pitch your business, so you need to be able to condense the entire business plan in an one minute elevator pitch.  Spending too much time on introductions, small talk, and name-games only robs you of the opportunity to present the important aspects of your pitch while their attention is still fresh.

2. Saying your business has no competition. One common mistake people make when pitching their business idea to a potential investor is refusing to acknowledge the presence of competition. Coming out to say that your business has no competition is completely a no-go area when pitching a business. Doing this only shows your investor that you are either being naïve or totally unrealistic. Whether direct or indirect, your business has a competition, as someone somewhere is providing a substitute for your product or service. You must invest a great deal of time and effort in substantiating your market and competitor analysis, because this way you will be able to prove to investors you have an understanding of the business you are about to start.

Related: 5 Awesome Ways to Lose the Interest of an Investor While Pitching

3. Giving bad or confusing answers to direct questions. This is another common mistake most first time entrepreneurs make when pitching their business to a prospective investor. You need to be well prepared to give concise answers to any direct questions you are asked by your investor. Most small business owners make the mistake of trying to evade the hard questions or providing conflicting answers to questions posed by investors, which only goes to show how unprepared you are.

4. Presenting a business plan with too many irrelevant details. Another common mistake many entrepreneurs are making when pitching their business to an investor is presenting a business plan riddled with too many irrelevant details that have nothing to do with the execution or success of the business. No investor readily wants to flip through 100 pages of irrelevant details in a business plan before being able to understand what your business is all about. A 3-4 page executive summary of your business plan and probably a brief PowerPoint presentation to spice it up should do the trick.

Related: What Type of Business Plan Suits You Best

5. Attempting to force an immediate feedback. Trying to force potential investors to give you an immediate response or feedback is another common mistake many entrepreneurs are guilty of when pitching their business.  In fact, most first time entrepreneurs make the mistake of wanting to know their fate almost immediately after they finish pitching their business. It’s important for you to remember that your investor is at least entitled to a few days to process and maybe do a little fact finding about your presentation before making a decision. Moreover, if there was more than one person at the presentation, then they would surely need to take some time to reconvene in order to appraise your business together.

6. Not being articulate enough about the market opportunity. Another common mistake most small business owners make when pitching their business to a prospective investor is assuming that everybody has the same perspective over the market opportunities and tend to overlook the details that show how big is the market potential and why.  The investors are interested in knowing the actual addressable market and what percentage of the market you plan to get over time, so focus your business pitch on those aspects.

7. Creating the impression that you have a risk-free business. Just as every business has the potential to become successful, there’s also the risk of failure or the risk of the unforeseeable happening. Your investors most likely know this already, so if you are giving them the impression that your business is risk free they will automatically think that you haven’t really investigated the risks involved well enough. It’s important for you to show your potential investors that you recognize the potential risks your business may face and you have a plan to mitigate them.

8. Making your business pitch all about you. Another common mistake most entrepreneurs make when pitching their business to an investor is making it seem that the entire business revolves around them. Starting sentences or answering questions all the time with “I will” has a way of passing you off as a self centered individual to your investors. Your investors are probably aware of the fact that you either have a business team in place already or you are going to set one up in the nearest future. Most would like to hear, once in a while how you plan to work with your management team or how your marketing team plans to overcome challenges along the way. Try sounding impersonal as much as you can when pitching your business to an investor

9. Failing to present a demo. One very common mistake most entrepreneurs make when pitching their business to a potential investor is failing to present them with a demo during presentation, especially if your business deals with physical products. Demos are worth a million words, and they enable your investors to have a better understanding of what your business is all about. Try showing your potential investors a prototype or a working demo of your website, app or product where possible. When it comes to pitching a business, never pass off the opportunity to create a lasting positive impression on your investor.

10. Using popular clichés when pitching your business. This is also another common mistake many entrepreneurs make when pitching their business to a potential investor or business partner. Using popular clichés to buttress your points during a business pitch is something every entrepreneur should try to avoid at all cost. Chances are that your investor has heard them one too many times for it to be of any effect on them. As much as possible, avoid business pitching clichés such as:

  • “We will enjoy massive usage”
  • “All the business needs is 1% of the market”
  • “This product is a born winner” (no, it isn’t)
  • “Our projections are conservative”
  • “Google will want to buy us”
  • “This business will sell itself”

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