Assume that you met a potential investor at a small business networking event. This is the perfect opportunity to market your new business, product or idea, and secure funding. But what will you say?
Investors are busy individuals. They won’t stick around until you gather your thoughts. This is where an elevator pitch comes into play.
It’s a brief, compelling and memorable speech, used to spark interest in what your business does and what makes it unique. The ability to draw in potential clients and investors to your business is what makes the elevator pitch a powerful direct marketing tool.
The whole point of having an elevator pitch is to be able to impress your audience in the average time it takes to complete an elevator ride. After all, that’s where it got its name from.
There aren’t any fixed requirements but try to limit the word count to 200 so that you won’t have to rush at the end. An ideal elevator pitch should be recitable in under 30 seconds while the maximum is 1 minute.
The best way to think of an elevator pitch is as an executive summery or overview that explains what your business does, how it’s different from the rest, why it’s going to be successful and when.
When to use an elevator pitch?
People tend to think that an elevator pitch is useful only when pitching your business to an investor to secure funding. That’s not true at all.
You can use it when introducing your business to potential clients and customers, proposing a new idea to the board of directors, selling your business to a competitor, or telling someone about what you are doing for a living.
Creating an elevator pitch
1. Define the problem
What problem are you trying to solve? If your business doesn’t solve a specific problem, its existence would not hold any value to anyone. After all, no one will invest their time and money in a business that is not feasible.
The size of the problem doesn’t matter. If your business aims to solve a massive problem, that’s great, but unfortunately, the reality is not like that for most businesses. Solving a small problem is fine as long as there are enough potential customers who currently face it.
Yes, some companies do tackle multiple problems but that’s because they have enough resources to do so. So just stick to just one problem and commit to solving it with everything you got.
Because some problems are more complicated than others, it may easily take up to 5 sentences to clearly explain everything. But since this is an elevator pitch, you will have to break the problem down to its simplest form and describe it in just 1 – 2 sentences.
An example would be “There aren’t any shoe stores in XYZ, Canada even though the city has three large schools”.
Better yet, start with an open ended question before defining the problem. For example, you may ask “Where can you to go buy a pair of school shoes as a parent living in XYZ, Canada?”.
Such a question would keep them more engaged but be prepared to answer any questions they might have.
2. Describe the solution
Most people start their elevator pitch from the solution and tend to skip step one, which is defining the problem. They go straight in and talk about the products and services they offer.
How can you expect the audience to understand the value of your business and its products/services when they don’t even know why you decided to start such a business or product in the first place?
Clearly explain what the problem is before providing the solution. This forces you to focus on solving that particular problem rather than stretching the solution to solve multiple problems.
And just like the problem, you must be able to describe the solution in 1 – 2 sentences. An example solution would be to “Open a school shoe store in XYZ, Canada”.
3. Define your target market
It’s time to say who your target market is. In other words, who are the people facing the problem that you are trying to solve and how many of such potential customers exist?
Be as thorough as possible. Taking the shoe store example from above, one may be tempted to define its target market as “everyone” because, after all, everyone has feet, right? Yes, everyone has feet to put shoes on but it’s unrealistic for one small business to cater all of them.
You should target a specific group of people to sell your product or service to. For example, the shore store (from the example) only sells school shoes and not any other type of shoes.
After determining who your target market is, you need to estimate the number of potential customers who may buy from you.
If you live in the U.S, you can get all the necessary information from Census.gov but if you are from another country, try searching for a similar site or visit the local Small Business Association.
Next, estimate how much potential customers are willing to pay on average annually for alternative solutions.
Now don’t tell me that your business doesn’t have competition. Even if you are really lucky to have no direct competitors, there would still be some other business providing an incomplete yet working solution to your problem.
These numbers are critical for any elevator pitch so be sure to include them in clear plain terms.
An example would be “We are selling school shoes for both girls and boys. There are 3 schools nearby and each has around 2,000 students. This adds up to 6,000 potential customers. With the costs of traveling to another city, parents spend $40 or more on average each year for school shoes.”
4. Describe your Unique Selling Proposition (USP)
Let them know what makes your business, product, idea or concept unique from other similar ones already in the market.
An example would be “We use high-quality genuine leather and everything from the sole to the shoelaces are hand-made. We focus on all three factors; comfort, design and affordability. The interior is super soft while the exterior is sturdy and compelling”.
5. Outline your team
Let them know how many people are in your team, what their responsibilities are, and why they were chosen to do what they do. Explain how each member can contribute to the success of your business.
But what if you don’t have a team yet? Should you back down? No! Just be sure to mention how many employees are required, what their responsibilities are and how much they would receive as salary.
An example would be “Right now, I’m handling everything on my own but for the business to prosper, we will need at least 6 employees; a cashier, two helpers, two delivery riders and one sales rep. The salary will be capped at $XXX per month but that may vary depending on the experience and qualifications they bring to the table”.
6. Provide financial estimations
Let them know of the expenses that come with your business and how long it would take to generate profit.
An example would be “We accept both online and direct payments, thereby giving customers more flexibility. Delivery is available for nearby locations at a small fee. Expenses include rent, utilities, salaries, machinery, equipment, web hosting, graphic designers, initial stock and etc. We are expecting $80,000 worth of profit during the first year and over $500,000 worth of profit during the second year.”
7. Put everything together
Now put everything together and read it out loud to yourself. Use a stopwatch to time how long it takes to deliver the pitch. You can stretch your elevator pitch up to 1 minute but the ideal time is 30 seconds or less.
If you take longer than that you risk loosing the person’s interest. So cut out anything that doesn’t have to really be there. Your elevator pitch must be short, memorable and compelling. Therefore, the shorter it is, the better.
An elevator pitch is not a write-and-forget thing. How you say it is just as important as what you say.
It’s normal to be nervous when confronting an important client or investor. And depending on how nervous you are, you may even forget some parts of the pitch. To avoid such situations, practice delivering the pitch until it feels natural to your mouth.
It’s also important to keep the right amount of eye contact and pacing between words. You don’t want them to feel that you are in a rush. Make it sound like a smooth conversation, and not like an aggressive sales pitch.
Finally, your body language. It tells just as much to your audience as your words do and allows them to see how excited and motivated you are about the business, product or idea. Practice in front of a mirror or in front of family and friends until you are happy with the result.
Your elevator pitch must cover the problem, solution, target market, unique selling proposition, competition, management team and financial estimations of your business, and must be recitable within 30 seconds.
By pre-preparing an elevator pitch, you know exactly what to say and how to say it. But no matter how good it is, your audience will soon forget what you said.
To avoid this, close the pitch with a formal handshake and give them your business card and brochure. This way, they will have something to take home and read during their free time.
Write your elevator pitch as a comment so that potential investors may see it. You never know where opportunity strikes.