As I write this in early 2019, I’m thinking back on more than 20 years of hearing business pitches as a judge of business plan competitions and as an angel investor.
Next month I’ll have another round of it, judging both the University of Oregon New Venture Competition and the Rice Business Plan Competition. Once again I’ll be reading business plans first, then sitting for the pitch and asking my questions.
The image here is of the Rice Business Plan Competition, entrepreneurs pitching at the finals. That’s me in the front row, second from the aisle, on the left. [Editor’s note: Permission to use requested via email 2/28/19].
1. Your pitch was boring
Tell me a story that resonates. Tell me about people who care, ideas, how you started, why you started, and how you’re going to change the world. And just so you understand, market need and solutions aren’t boring, especially when you show them in stories rather than alleged facts.
And please give me financial projections with assumptions laid out clearly—that’s not boring at all. Your business is exciting. Your prospects are exciting. Don’t dry it all up. Talk about it. Add interesting pictures to back your stories up. Put faces on the screen when you’re talking about people.
Read Resonate, or Presentation Zen, or just at least the blog post Really Bad Powerpoint.
2. You shared ridiculously optimistic projections
I’m amazed at how many pitches I’ve sat through that project completely unrealistic profitability. Please, get a clue.
Real businesses make profits like 7 percent, 9 percent, occasionally even low double-digit profits (stated as a percentage of sales). Rarely, some new innovative businesses will get to 20 percent profits to sales. And yet I’ve seen many pitches projecting 30 percent, 40 percent, even some with 50 percent and 60 percent profits.
Wildly optimistic profits kill credibility. They don’t convince me that you’re going to be that profitable. They tell me you don’t know your business that well.
So get benchmarks. Find out what other businesses like yours, on average, are making in profits. Benchmarks for different industries are easy to find online for a small fee. They are even built into LivePlan.
3. Your co-presenters were bored
When more than one person presents, the others have to act interested. Sure, you’ve heard the pitch many, many times, but if it bores you then that makes me less interested.
New businesses are fascinating. The new ideas, creating new markets, really smart people, that’s all fascinating. So step up your pitch.
4. Your slides were full of words
You should say the words, talk to me—don’t have us all reading the pitch deck slides together with you.
That goes back to point 1 above, boring. You should tell a story and show pictures—see point 1.
5. You read your slides full of words out loud
Never turn your face to your slides and read us the bullet points. That makes all of us listeners want to throw something at you. Point 1 again.
6. You used buzzwords and meaningless adjectives
Why is it that every single plan is “disruptive?” Can they all be? Don’t use the same words that everybody else uses.
I don’t mind the technical jargon as much because people know they have to explain them. I mind all these trendy buzzwords that everybody applies. Not just disruptive, but also game changing, market-leading, and viral, and pivot. They remind me of the old days when every software package claimed to be user-friendly (and mine was the only one that really was).
Tell me the story of what you have, where you are, how you got there, and who’s it for—let me decide the adjectives.
7. You focused on internal rates of return and net present value
I’m glad they taught you internal rates of return and net present value in business school. But both of those calculations are based on five years (or so) of future cash flows. They are assumptions cascading on assumptions, presented as if they were statistical truth.
Show me your projections, yes, and, even better, show me the assumptions behind them. But don’t quote me a damned IRR. I’ll judge your projections for realism and credibility, but that’s sales, costs, expenses, cash flow, and other basic numbers. Not discounted cash flow.
8. You tried to dazzle with big market “facts”
I hate hearing about a $43 billion market, and even more so when you present a sales forecast validated by getting some percentage of that market. I’m not alone in this. Most investors hate the forecasts that start with a huge number and take some small percentage of that number as potential sales.
Instead of that, validate sales by bottoms-up assumptions. One really good example is a sales forecast that sets an assumed number of sales per month per store and an increasing number of stores. Or the web subscription forecast that tracks web visits, conversions, conversion rate, pay-per-click results, email opens, and so forth. Or the enterprise sales forecast based on sales reps, pitches closes, and pipeline.
Be sure you understand the difference between the three popular concepts on market and market share: TAM, SAM, and SOM.
9. Your bluster tripped you up
Know what you don’t know. Don’t bluff investors.
Some entrepreneurs take a pitch presentation as if it were some kind of verbal final exam, in which they have to know all the answers. What they don’t know, they guess, pretending they do know. That’s disastrous. Odds are that in a group of investors, somebody will recognize this kind of bluff. That kills credibility.
When you don’t know, “I don’t know” is the best answer. And, unfortunately, there’s no way to look good when you don’t know the essentials related to your own business. Bluffing makes it worse.
10. You avoided fault or responsibility
“Yeah, these numbers are probably wrong. Our financial person did them but we’re going to change financial persons.” What? Yes, I did hear that in a presentation once.
Investors are looking for businesses they want to join and support. Most investors assume that people who deflect and blame others are not likely to be working well with a team. I suggest you read this personal account, a true story: Did You Get Screwed in Business?
Did you know this article is part of our Bplans Pitch Guide? Everything you need to know about creating your pitch, all in one place.
Hear more pitching tips with Peter and Jonathan on the tenth episode of The Bcast, the Bplans official podcast:
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