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Friday, February 17, 2012

Got a Great Pitch, GET IN LINE

Entrepreneurs learn that an important part of building a startup is to develop a great pitch.  They practice the pitch and via “trial by fire” give the pitch to other parties.  They are always refining the story in an effort to improve it and gain investments or partners.  This is all a normal part of developing and growing a startup.

Sometimes, we all forget that our startup is not the only business that has developed a pitch.  ALL of the prospective investors, business partners, contractors, sales people, and service providers have their own pitch.  It is hard to be in sales or service without having some story to present to clients and develop a skill of closing a transaction.  It is in the development of your startup that you must realize that the people you speak with are also pitching YOU!  This means you have to evaluate them with some of the same scrutiny as they are evaluating you.

You must protect the resources in your startup.  Every sales pitch you hear may cost you money, time, or other resources, even if it is nothing but trying to evaluate the other side.  Take for example, your approach to an investment-banking group.  Every one of these firms has one real goal that is that they want to make money. Your startup is a potential product for them so present to investors and if they are successful, they make money because you get funds from the investor.  They represent you, but their real customers are the investors they go to with all their other companies that need cash.  The companies they hawk are the inventory they sell.  It was no surprise when a friend once told me that investment-bankers were “all whores, the only difference it the price of their suit.”  The phrase was to relay the fact that the firms tell you what they think you want to hear.  In the end, the deal gets done or it does not.  Investor-relation firms fall in a similar frame.  They know how to present your company to help you gain recognition.  They know how to sell!  Get the picture.  They also know how to sell to you.

Your prospective partners or service providers want your business.  They have developed skills to present why you should be working with them.  They will have slides, handouts, great sales people, demonstrations, dinners, and other benefits.  The companies have become viable because they honed the skills required to get business.  Maybe your business.

A much bigger issue is your ability to assess who you believe is REAL and who is NOT.  The companies, partners, or investors may also be terrific (or not).  The ones you pick should be selected because your diligence suggests they provide you with the greatest chances for success.  They should be people you trust and want to work with.  In essence, you need to do due diligence on them, just like they will need to evaluate you.

The need for knowing and trusting your possible partners also goes for trust in your investors.  You will need money.  Are you evaluating how the investor will affect your business?  Many of the investors will want to be on the board or have some other part in the business.  Companies sometimes end up with boards of investors that just kill the company.  I know of a few of these situations and believe me when I say the situations are terrible to deal with.

The whole point of this article is that you are not the only one pitching your wares!  You have to listen to others and will need to learn to evaluate what is said as well as the ability of the other party to deliver.  In the end, you are the CEO & Manager.  You must “PLAY YOUR CARDS, AND TAKE YOUR CHANCES.” At least make sure you have built the strongest hand to play!