Having an understanding of your business’s operations seems like a simple feat, but too many business owners are not familiar with key performance indicators.
In order to convince investors to finance your company, it is essential to know which quantitative measures investors care about the most and what drives the motives behind your company.
A mission statement effectively defines the direction a company is headed. Business owners use this statement to inform customers and investors of their purpose in addition to reminding their employees that they have a goal to work toward. By clearly articulating this, you will be able to express the reason for your business’ existence and what you aspire to achieve in the future. This is a good starting point when discussing your business as others will quickly learn what you can contribute to society and your industry.
This is the bread and butter of your business. Without a comprehensive understanding of your product or service, you stand no chance of selling anything. Investors and potential customers need to know exactly what you have to offer, and more importantly, how it is going to help them. One common mistake to avoid when explaining your product/service is to simply state what it is on a surface level. You need to stress what your company’s service means rather than what it does or makes. Demonstrate a complete understanding of what need your product addresses in the market.
When discussing your company, avoid phrases that sound like this: “We are a full service auto transport company that proudly serves City A and is committed to customer service.” This presents a basic understanding of your business that any other individual can explain. A preferred alternative to stating what your service does is to state its importance to customers. An example of a more valuable explanation of your service could sound like “Moving can be costly. Selecting the right auto transportation service can be the difference maker in making your next transition in life stress-free. Our goal is to…” By understanding your company well enough to tailor its service to the needs of the market, you will be prone to increased sales and exposure in the marketplace.
After identifying what you hope to accomplish and what you have to offer, you need to identify how you are going to stand out from competitors. You need to know what specific aspects of your product are unique and why they are better in comparison to competitors. Pinpointing target markets and discussing how your product satisfies their desires shows investors that you will have reliable revenue streams. You need to conduct in-depth research on your competition and prove to others that there is concrete value your service provides that is not available elsewhere.
Background and Industry Experience
Once your company’s value is properly communicated to others, they might want to understand who is responsible for carrying out the operations. Investors do not want to work with individuals who have made major mistakes in the past or who have very little experience in an industry. Investors want to be assured that companies are led by teams with a track record of high performance. Having a thorough understanding of your working team and their accomplishments can place investors at ease and enhance your company’s probability of success.
The historical performance of your business is going to be the key indicator that investors look at when deciding whether to finance your company. When discussing your business with others, they are going to be interested in how the company has grown over the years. Providing factual information and evidence of its growth potential will establish your standing in the market. Future projections and other accounting procedures are going to heavily rely on this information. Proving to customers and investors that you have a track record of success will make them feel more confident in your abilities, and help your business transcend to the next level.