The Elevator Pitch

The Elevator Pitch “The “entryway” to your business”

It’s how you and your colleagues describe your organizational goals and the services you offer.

What is an Elevator Pitch?

An elevator pitch is a concise, carefully planned, well-practiced description of your company that you can comfortably deliver in the time it would take to ride a few floors in an elevator. It should inspire others to seek out more information about your company.

What an Elevator Pitch is not:

It is not a sales pitch. Don’t make the mistake of using the entire pitch to describe the technical specifications of your products or your implementation process. Your prospects seek the solutions which your company offers, not a specific product. Focus on the value you will add to their business.

An effective elevator pitch is:

  • Brief
  • Customer-focused “Why should I care?”
  • Benefit-driven “What’s in it for me?”

You should develop both verbal and written versions for different uses:

  • 30 second verbal: phone pitches, presentations, networking
  • 25-50 word version: email solicitation
  • Single paragraph version: brochures, website, written presentations, press releases

When to use an Elevator Pitch

An elevator pitch is the most essential piece of your marketing program. You should use it in the following areas:

  • Front page of your website
  • Brochure copy
  • Networking events
  • Email information about your company
  • Final paragraph of a press release

All employees should be comfortable communicating your elevator pitch as ambassadors for your company. Similarly, your suppliers and outside partners should also be comfortable with your elevator pitch.

Examples of Good Elevator Pitches

Hewlett Packard (HP)

HP is a technology solutions provider to consumers, businesses and institutions globally. The company’s offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters that ended October 2004, HP revenue totaled $79.9 billion.

FedEx

FedEx provides access to a growing global marketplace through a network of supply chain, transportation, business and related information services.

Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Business Plan

A business plan is an important document for any business and it can be written for a variety of reasons. Internally, it can help owners and managers crystallise their ideas, focus their efforts and monitor performance against established objectives. Externally, the business plan can act as a medium for attracting finance for start-ups or expansion.

There are many books and publications, which tell you how to write a business plan, what it should contain and how it should be used. This one is different. This is a work pack specifically designed for those who wish to raise finance.

For many Entrepreneurs, the experience of raising finance is a new one. The importance of the plan to this process cannot be over‑emphasised. Many opportunities presented to financiers are subsequently rejected. It is essential, therefore, that the entrepreneur prepares a quality document. The objective of this work pack is to help you prepare just such a document by providing you with the headings which need to be covered.

This document will assist you in preparing your plan, particularly by focusing on the possible problem areas. These issues need to be considered at the outset because, if they are not, they will certainly be raised later by potential investors. The problems should be addressed upfront and, in so doing, ensure that none of the questions asked later by investors come as any surprise.

The sections, which follow, outline the contents of the business plan with associated relevant comments designed to provoke thoughts that can assist your preparation of a business plan which will adequately convey your ability to succeed.

1.1 CONTENTS

The business plan should summarise the proposed activity and the prospects for success for the venture, paying particular attention to factors that are critical to success or failure.

The contents should be tailored to the particular individual requirements, circumstances or characteristics of the proposal. However, in general, they commonly fall within the following categories:

  • Summary
  • Current position
  • Objectives
  • Marketing plan
  • Operations plan
  • Management and staff
  • Financial plan
  • Information and control
  • Risk factors and rewards

The business plan should be written by the entrepreneur, the management, albeit possible with the help of professional advisers. The investor is backing the management and the plan must be an expression of your objectives. Experience has shown that the advisers provide a useful role in helping to determine the overall structure of the plan and can provide helpful ideas and reactions.

1.2 SUMMARY

Although preferably written last, the summary should appear at the front of the proposal.

It is essential that the summary ‘catches the eye’ and grasps the imagination of the reader by providing enough information for him to decide in principle if he could be interested in the deal.

Financiers have different preferences and are looking to invest in different situations. The summary must be clear enough for them to establish from the start whether the case is worth pursuing.

The summary should include:

  • What your product is;
  • What your market is;
  • The financial highlights, by product if relevant;
  • The finance required;
  • Management experience;
  • The potential ‘Exit” routes for the investor;
  • The unique aspects of your product;
  • Why customers will buy from you rather than your competitors; and
  • In the case of new or innovative products, what barriers there are to prevent competition entering the market?

1.3 CURRENT POSITION

This section should be a brief resume of the stage the business has reached and how the company has developed in the last few years, with reference to factual information

The following questions should be addressed:

  • What is the corporate structure?
  • Who owns the company?
  • Who are the senior managers?
  • What is the management structure?
  • How many employees are there?
  • What is the location?
  • What is the trading history?
  • What are the key financial ratios?
  • What are the strengths of the business?
  • What are the weaknesses?
  • Which areas could be improved?

1.4 OBJECTIVES

The business plan should include a clear and concise statement of the current objectives. Some factors are easily measured such as turnover or profitability targets. Others are, however, more qualitative in nature and these should not be disregarded simply because of their subjective nature. It is important to recognise that performance will be monitored against these targets by external investors at a later stage; consequently they must be achievable. Future positive and negative variances will have to be explained.

You should state the following:

  • Any turnover targets by product, if relevant;
  • Any profit or cost reduction target;
  • Any market share ‑target;
  • Any non‑financial objectives such as improving your
  • customer service;
  • industry reputation;
  • product quality;
  • Any relevant personal objectives.

1.5 MARKETING PLAN

This is a vital area, which should be explained in detail. The location and size of your market will need to be defined, together with your share of the total. Where relevant, you may need to involve third parties to substantiate your claims; guesswork will not do!

You will need to demonstrate the steps you are going to take in marketing your businesses and the impact you expect this to have. Are you assuming that your market share will increase? If so, explain why. Dependence on success from large increases in market share will often be difficult to justify.

How influential are your competitors and to what extent are they in a strong position to influence your market share? Is your market dependent on external factors over which you have no control? If so, these need to be predicted and planned for.

In summary, include the following:

  • Absolute size of your domestic market;
  • Absolute size of your export market;
  • Trends and developments expected in the market in the future;
  • Your market share;
  • The factors influencing the market; and
  • The risks associated with new markets.
  • Furthermore, you should have investigated both the competition and your customers and be able to state:
  • Who they are;
  • What the strengths and weaknesses of your competitors are;
  • What the response of the competition will be;
  • How your product is superior; and
  • The relative importance of each customer and competitor.

1.6 OPERATIONS PLAN

This section may seem more relevant to a manufacturing business but applies equally to other industries and service companies. Existing products or services should be considered in turn, and thought given to how each can be improved, developed or replaced to maintain competitiveness. Furthermore, if goods are being manufactured, or a new service is being offered it is important to consider the side effects. For example, more staff and production space may be required; raw materials purchased and stocks held may need to be increased, or specialist staff recruited. The operations plan should state how all these will ‘come together’ to achieve success.

Describe:

  • Products or Services;
  • Highlight unique qualities;
  • Identify plans for diversification;
  • Facilities;
  • Manufacturing processes;
  • Plant and machinery used in processing;
  • Organisational structure
  • Identify key positions, roles and responsibilities.

1.7 MANAGEMENT AND STAFF

It is said in the industry that financiers back people not businesses. The quality of the management team is recognised as the key factor in any investment decision. The importance of this should be borne in mind both when preparing the plan and during negotiations with potential backers.

It will be important, too, to demonstrate that the team can work together and that there are unlikely to be conflicts or confusion of roles in the future. If there has been a high turnover of senior staff in the past, explanations will be required.

The plan should include:

  • Evidence of the track record of key individuals;
  • Their experience in the industry;
  • Future executive requirements;
  • Curricula vitae for senior managers (usually relegated to appendices);
  • Identification of the key function areas e.g. marketing, finance etc. and that each of these is covered by management with appropriate experience;
  • The financial rewards to the senior executives;
  • The likely share ownership structure;
  • The ages of the senior executives. If they are likely to retire soon, what provisions have been made for succession;
  • Identification of the team leader.

1.8 FINANCIAL PLAN

Many business plans fail to raise finance due to the inadequacy of the financial information provided. Investors will be assessing the projected funding requirement and the anticipated profitability to establish whether the proposition is commercially viable, and the potential return sufficient. Ensure that the financial plan reflects the objectives set out in the other constituent parts of your business plan.

Include the following:

  • The funding requirement;
  • A summary of the projections;
  • A summary of key financial statistics;
  • The detailed assumptions behind the forecasts;
  • A summary of the sensitivity of the forecasts to the key assumptions.

 The following must be appended:

  • The detailed projections for up to 3 years including profit and loss accounts, cash flow statements, and balance sheets;
  • The most recent financial statements; and
  • Details of any sensitivity analysis.

1.9 INFORMATION AND CONTROL

Writing a business plan is not a one‑off exercise. It becomes a more valuable management tool by being used and reviewed regularly as the business develops.

Internal review of the business is only possible by ensuring that adequate management information and control systems are in place. Furthermore, external investors are likely to require that regular financial information is forthcoming from the company.

The business plan should therefore contain the following:

  • An outline of the transaction recording systems;
  • Details of the regular management reports;
  • A demonstration that the business has staff with adequate financial skills;
  • Details of how the business will be managed on a day to day basis.

1.10 RISK FACTORS AND REWARDS

It may seem strange to include risk factors in what is intended to be a selling document; however, it has the definite advantage of lending credibility to the proposal.

By including the major risks, financial and otherwise, that are likely to affect the business it demonstrates that the entrepreneur understands that all businesses have potential stumbling blocks and has taken steps to identify these and developed a strategy to overcome these problems.

The best method to consider risk factors is by a sensitivity analysis of the forecasts. Modem computerised spreadsheet packages are capable of being used extensively in this application.

The main results of such analysis should be incorporated into the plan particularly with regard to sales not reaching budgeted levels and the resultant effect on cash flow which is the demise of many new ventures.