Techblog
Startup 101: Getting investors to believe in your product or service (part 2 of 4)
A business plan isn’t just about the facts and figures. It's also about selling the story about your products and services. But how do you convey that in an engaging way to connect with investors?
An important part of developing a business plan is clearly defining and describing your product or service offering. Investors are more likely to buy into your company if you can effectively tell the story of your products and how they will impact the market. Here are some key considerations when articulating your products in your business plan:
1. What are you selling?
Investors need to know what you're selling and why. Did you see a problem in the market you didn’t think was being addressed? Or were competitors doing a poor job?
To make your story more compelling, illustrate to the investor the need for such a product by consumers and how the solution came to be. Highlight the challenges faced by consumers due to the lack of suitable solutions and how you came up with your product to meet the need.
Telling your individual story means the investor is more likely to relate to you than if you only explained your products and services. Clearly convey what makes your product unique or how this is addressing a different need in the marketplace.
2. How do you benefit customers?
Products and services can only be successful if they benefit the customer, so you must be able to explain how your products or services benefit them.
For example, explain how there is a market need for your products or services and what your target markets are.
Remember to be specific. Instead of saying "it will make their lives easier", explain exactly how and why it makes their lives easier and why it's better than competitors. Listing the benefits in dot-point form will help make this section easier to absorb.
3. Tell the Technical Story
Some investors may be interested in your production process and the story behind how your products are made. Be illustrative in sharing the process and be able to assure that production is sustainable and necessary arrangements are made to ensure that production will not be interrupted.
Also try and avoid industry jargon when explaining your product offering to make it easier to understand by an investor who might not be familiar with industry specifics.
4. Future roadmap
As an entrepreneur, it's likely you have ideas in the pipeline, so remember to touch on what you are working on and where they are in their life cycle. For example, are they still ideas or are they nearing prototype completion?
A product roadmap provides a clear path of how your products will evolve to deliver better customer value and provide longevity. Make sure you can explain these in terms of market potential and provide solid reasoning, backed up by data or results to show your decision-making.
Be objective
There may be parts of the development story you have a strong emotional connection to. However, stand back and objectively assess what the most interesting aspect would be from an investor's point of view.
Did a product go through a relatively short prototype phase and go on to sell well? This indicates you have a knack for knowing when something is right from the beginning. Conversely, did a service take a while to refine? This indicates you have patience and persistence in ensuring it is as good as it can be.
We’ve touched on how to compellingly describe the story of your product or service in your business plan. In the third of this four-part series, we look at your sales strategy.
What tips do you have for telling your story in your business plan?