Before you think about creating a pitch deck, you should already have written a business model. Why? Because a business model will outline how your company will make money. If you can't show how your company can make money, you won't need a pitch deck.
Today we're going to focus on the information investors will be looking for that clearly show HOW you will make money with your new-to-market idea.
So, you've had your ah-ha moment and started your business. Now it's time to seek out capital from an investor to grow the business. To do that you are going to need to show an investor how your idea is going to make money. You will find that data in your business model. The business model you developed is your company's core strategy for making a profit.
Read on to find out more or watch the below video for more information.
If you haven't developed a business model, you should definitely start developing one right after watching this video. It doesn't take long and is a combination of an overview of the product you are selling, the target market you are selling into, product development, and your revenue model.
The content for a business model sounds awfully similar to a pitch deck, doesn't it? And here's the win, once you have a business model, you can easily pull content from there into your pitch deck.
That doesn't mean it's a clean dump from your business model into your pitch deck. Your pitch deck is going to have to explain your full strategic message, and that message includes content drawn from your business model and your business plan.
Where your business model demonstrates how your company will generate its profits, the business plan outlines your business goals and how you are going to achieve those goals. It's a business road map.
As a start-up, you would have developed a business model, and this information would have dovetailed into your business plan. Starting an enterprise without these documents is like a boat without a rudder. Who knows where you will end up or even if the journey is worthwhile.
If you would like more detail on business plans, I produced a video called Pitch Deck vs Business Plan (WHICH SHOULD YOU USE). Check it out if you would like to learn more.
Now, let's get back to your pitch deck and the slides that demonstrate how you are going to make money.
No business is the same as the next, and that's why each companies business model is unique. So are the number of slides you will be featuring in your pitch deck. I suggest you don't try and fit all the information onto one slide. You will lose your key points in a jumble of financial information which won't make sense to anyone but you. Investors will be looking at these slides very carefully, and I suggest you make the data very clear and easy to understand.
What slides will you need to demonstrate you have a business that will make money?
Let's look at what financial information investors are looking for and why. I'm not going to go into the finer details of your financials. If you want to dig into your financials further, I produced a video called Pitch Deck Financials (NAILING THE NUMBERS).
Investors will be very interested in your pricing strategy and will need you to demonstrate the cost and profit from sales. If you can, it is a good idea to be already selling your solution so that you can validate your numbers. Having a history of sales will demonstrate to investors that your target market is willing to buy your solution at the price you've shown.
Your numbers will cover all channel markets and products you are offering. You can have supporting slides for each solution or channel if you need to, but don't forget, your pitch deck is an overview of your business. In a pitch deck, too much information can hide your core message.
I had a client that believed more information is better than less. No matter what I did, I couldn't seem to limit him to 50 words a slide. He finally relaxed when I suggested that he create a detailed business plan and have it at the ready if more information was requested.
Investors will also want to see your company's gross profit so they can calculate if you have a competitive price compared to others in the market. If you don't already know; your gross profit is revenue minus the cost of goods sold.
Many investors look to gross profit to evaluate a business because it shows where the problems lie. Usually, it can be corrected by raising prices and reducing costs.
Let's make a simple comparison of two companies to illustrate what investors find so interesting about gross profit.
We have two companies in the same industry, both sell the same widget for the same price and have revenue of $5 million with a gross profit of $1 million. They are neck and neck.
Now imagine if Company A has a sound business model that shows creating an online shopping portal will cut costs by $2 million.
Gross profit has just gone up to $3 million. All Company A needs is a backer to cover the additional costs for the development of the app. The cherry on top, they can easily add products to their range and the push into other widget markets.
A savvy investor would jump at the opportunity as its a proven market with massive potential for growth.
The next figure they will be looking for is your net profit.
Your net profit is revenue minus all operating costs, including tax and interest. A healthy net profit would be north of 10%.
Your net profit will be the income you have leftover to grow the business. Just a little heads up, if that number is increasing year after year, it doesn't mean that your company is necessarily doing better year-on-year. An investor would be looking at both your gross profit and operating profit for any weaknesses.
If there aren't any, you've done exceptionally well and have produced an excellent business model that shows you are going to make money and as a result, be an attractive investment opportunity.
We've been focusing on the financial slides in this video, but you have to make sure you have all the other vital points investors are looking for in your pitch deck. Download my pdf guide to double-check. It will also give you some tips on how to expand on those points.
If you need any help at all with your pitch deck, then go to the website link below and upload your current presentation.
I'll take a look at your content and strategic message and let you know if you have missed anything or if you are on the right track.
If you are starting your pitch deck and you need help with its design, choose one of the four options you will find there, and I'll jump on to it as soon as it arrives.
You will hear a lot of no's along your journey but don't forget; you are following your dream, so keep on pitching with passion! You are just one pitch away from success!
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