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Your Elevator Pitch: Communicating Your Revenue Model is Key

Published: September 9, 2010 Updated: May 24, 2012

At our SBDC in Columbus, Ohio we occasionally run a contest called,;Pitch It-. I-s an elevator pitch contest that gives budding entrepreneurs the opportunity to practice their pitch delivery in front of an audience and panel of business development judges. Everyone who hits our stage is excited to have a chance to talk about their business. The passion in their presentation is evident, but what usually is not is how the business will generate revenue. Here Michael Bowers* enlightens us on how to present a pitch the right way.

You have a cool business idea. You are ready to move your business idea to a real business. You are ready to raise money to take your idea to the market. You're out there pitching, pitching and pitching your idea. Why aren't you getting money? Because you aren't telling the investor what they want to hear...How you are going to make money? Let me be clear, I know you are discussing the product, the market, the management team and projected financial statements (the standard stuff) but are you telling them...How you are going to make money?

Put yourself on the other side of the presentation. What would you want to hear? What you wouldn't want to hear is how the entrepreneur thinks they'll make money. You don't want to hear generalities? You want to hear specifically what steps they plan to take to target, sell and close business. Here are a few things you can do to better articulate your intentions:

  • Focus on adding value: A couple of years ago I wrote a post called 'Value Inflection Points'* where I discussed the concept of building value in your company by focusing on activities that build value in the business (it's real good, you should read it).
  • Focus on 'execution-oriented' activities: Execution is more important than anything else. VC's will tell you that 'A' teams with 'B' ideas will beat 'B' teams with 'A' ideas. This is due to the 'A' teams ability to execute.
  • Be specific: Don't talk in generalities. Be very specific in describing your plan to attack the market and get people to buy your product.
  • Pitch, don't beg: Think of this as a sales presentation because it is. You are pitching your ideas to investors to get them to buy into your company. Granted some investors are jerks but good investors that like your business will look to create a win-win for both them and you.
  • Get help: If this is your first time seeking funding do not go it alone, get some help. There are a number of free resources like the Small Business Development Centers* (click here to find your local SBDC*) or TechColumbus * (if you are in Central Ohio) that are charged with helping entrepreneurs succeed. You should also look at mentors and advisers that have been there, done that to provide you guidance.
  • Be flexible: Learn from every experience and apply it to your plan. You may start out on one path but through discussions with customers or investors you can gather valuable feedback on your product that may take you down a more profitable path. Be willing to listen to this advice and incorporate as appropriate.
  • Don't beat your head on the wall: This kind of goes along with the previous point but when something isn't working, do't keep using it. I know a guy that has been pitching the same product since 2000 and he has never gotten any investment. His product was actually not too bad when he come up with it but due to his lack of willingness to change he missed his market window and he no longer has a viable product.
  • Don't focus on Percentage - focus on Dollars: In the war between investors and entrepreneurs many of the battles come down to valuation. You think your company is worth $20 million and the investor values it at closer to $2 million. What do you do? These difference in opinions can be the difference between selling 10% of your company and 40% of your company. Trust me you won't win this one but if you focus on working to reach a realistic valuation you can reach a level you are comfortable with. Look closely at where the company is really at today and what you need and when you need it to move your company from milestone to milestone. At each milestone what is happening and how is this impacting the value of the company? Work all of this through and bring it back to make a case for where you honestly think the valuation should be.
  • What's the bottom line?: I'm not talking about the company's financial bottom line, rather the big picture bottom line. Do you need the money? Are you clear to yourself how you are going to deploy the funds to build your business? If you need the money you have to get it. Don't engage in unnecessary confrontation over silly details. Work to build your case to get the investment.
  • Focus on sales and marketing, not the product: Revenue is what will drive value and get investors excited. Everything else is window dressing.

Seeking investment is a challenging process. The key is to put as much detail as you can into what you are going to do to drive revenue and valuation. If you do this and stay committed and diligent, your odds of success will increase dramatically.

Now that I have you thinking drop by the blogs of a few of my friends and consider their thoughts on this subject. Susan Solovic discusses how the professional presentation is key to attracting investors and Caron Beesley shares why your business needs an elevator pitch and how to stand out in the crowd. Happy reading!

 

You can also find Tonya on twitter at @TonyaWilson

* This hyperlink goes to a non-government website

About the Author:

Tonya Wilson
As a member of the Ohio SBDC at Columbus State, we provide entrepreneurial development assistance and business consulting to start-up, emerging, and existing business owners. In addition to one-on-on advising, we create, coordinate and promote programs and events to inspire, educate and engage individuals who wish to start or grow a small business.

Operations Manual Basics For Future Franchisors

By FranchiseKing, Guest Blogger
Published: April 13, 2010 Updated: January 8, 2014

Making the decision to franchise your business should not be taken lightly. Not only will you be investing a sizeable amount of money, but you'll have to provide a blueprint of how your business runs to your franchisees. That's going to take a bit of time.

I'm sure that you're excited to start, because you read somewhere that great wealth has been created by a multitude of business owners who have used franchising as their growth vehicle.

Before you get to the 'wealth creation' part, you must write a powerful operations manual. This manual has to be your best work. It will be the foundation of your franchise, and you'll have to live it and breathe it in order to ensure your success (as well as the success of your franchisees).

Your franchise operations manual will list the agreed upon standards and procedures for your franchise, and will include the recipe for your secret sauce, which is all of your proprietary information.

The Patent & Trademark Office has some great information about protecting your proprietary information.

Does that last sentence instill a little fear in you? It should. You'll be giving up your secrets. All of your franchisees will know how to copy your business model, from A to Z. You're giving up some control by giving away your secrets, while at the same time you're putting systems in place so that you can maintain a high level of control of the folks that you're allowing to enter the system as franchisees.

Besides your proprietary information, there are five basic things that a franchise operations manual must contain. These are:

  • The Introduction: Included in this section will be a bit of company history and a company's short and long-term goals, along with some information on how the franchisor plans to support its franchisees.
  • Operations: This is the step-by-step procedure area. If it's a food franchise, portion sizes, food preparation processes, and order times may be included. If it's a business-to-business type of franchise, specific lead-acquisition methodology and sales procedures will be included in this portion of the operations manual. A section on marketing will usually be found in this section too.
  • Payroll and Accounting: This section will explain specific accounting procedures that you'll have to follow to run a profitable business. There will also be an explanation of hiring and firing procedures, along with suggested employee pay scales, and possibly some information concerning labor laws.
  • Customer Service: This portion of the franchise operations manual lays out specific customer service policies and procedures. Everything from how to greet your customers to specific ways to handle customer complaints will be included here.
  • Personnel: This section will provide all the information you'll need to train your employees. Job descriptions and even sections on employee motivation will be found in this section.

Franchise operations manuals are a vital part of the business model of franchising. Here's how important they are, according to Mark Siebert, the CEO of the iFranchise Group, who wrote this in Entrepreneur magazine*;

Operations manuals and training programs can seem to have little immediate relevance to long-term success. But they are vital for brand maintenance and liability protection. One well-known franchisor lost millions in a food-borne illness lawsuit because its operations manual did not contain the appropriate language. Another franchisor lost a lawsuit because it was overly prescriptive when discussing the type of drop safe that the franchisee was required to use. And on the flip side, a third franchisor saved itself from protracted litigation in a sexual harassment suit brought against a franchisee when it demonstrated that it had thoroughly documented and trained that franchisee on the bounds of acceptable behavior.

A properly written franchise operations manual will go a long way towards your long term success as a franchisor.

*Non-government link

About the Author:

FranchiseKing
Joel Libava

Guest Blogger

The Franchise King®, Joel Libava, is the author of Become a Franchise Owner! and recently launched Franchise Business University.

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