Keep this very high level. Avoid the temptation at this stage to delve into detail around patents or pilot studies or PhD students. But don?t sell yourself short ? if your idea has a key twist then be sure to state it ? ?We will operate unmanned smartphone-operated bicycle parks within 100 metres of commuter train stations?, for example. (3)?Who are you solving it for?
By stating clearly the problem you are solving, you have also defined your target market. One flows directly from the other. Continuing with the example, your target market are commuters who cycle to train stations where there is a significant risk of have their bicycle nicked. Care is required here, because often the benefits of your idea will accrue to multiple audiences. But don?t get side-tracked on a rambling journey of how X leads to Y which, ultimately, leads to world peace. When you start a new venture, your customer is the one with the biggest benefit at the outset. In due course, insurance companies might benefit from a reduction in bicycle theft, but they are not the biggest beneficiary at the beginning. (4) How many of these people are out there?
So your target market are the people who will derive the biggest benefit soonest. Not only is that a clear and powerful message, it also makes it much easier to size the market. How many large train stations are there in the UK? Simple to answer. How many bicycles are there at these train stations? Easy ? go and count them at five stations and use that as a proxy for the rest. When answering this question it is also helpful to indicate that your target market is growing. (5) How are they solving that problem today?
This will define your main competitors. It will also suggest how likely it will be that your customers will engage. If there are lots of alternative and acceptable ways to solve the problem, then your ?new? idea might not be so compelling after all. This answer really drives at the heart of the investor conversation. In our example, there is only one real mainstream competitor: the bicycle lock. But if bicycle locks really worked, then why are so many bicycles being stolen today? (6)?How will you make money? Now for the big one. The key question that is missed with eye-watering regularity from would-be entrepreneurs. What is the economic assumption that underpins your entire proposition? And it really must be simple. No convoluted calculations or glow-in-the-dark formulae. One simple sum to say it all. We charge ?1 per bike per week and will make ?100,000 per site per year. To re-cap, our fictitious anti-bicycle theft business pitch now looks something like this: we are solving the growing problem of bicycle theft from train stations. In Britain, over 100,000 people cycle to the station every year; roughly 5 per cent of bicycles are stolen. Our solution is to operate unmanned smartphone-controlled bicycle parks within 100 metres of busy urban train stations. We will charge ?1 per person per week and will make ?100,000 per site per year. If you say that out loud and slowly, it takes about 20 seconds. So how should you use the 10 seconds remaining? Answer the one question the investors will be asking themselves from the moment they shook your hand: why should I invest in you? Read Stuart Miller’s previous piece, about the three “phases of change” for startup CEOs, here.?
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