Loan Approval Rates Vary Greatly. Why?

Loan approval rates are important to understand for everyone

Getting small business loans is frequently a must when it comes to building your business. In a look a t30,000 small business loan applications, Biz2Credit discovered, restaurants and other accommodation businesses, such as hotels, caterers, and the like had the highest loan approval rating. This is surprising as restaurant and other accommodation businesses tend to have lower survival rates.  Why is that? 

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Alternative Lenders

Restaurants and other food and accommodation businesses are inherently riskier, and thus, many food businesses do not qualify for traditional bank loans. However, they can get funding via non-bank lenders, who charge higher interest rates. Remember as we said in our early posts, just because you can get a loan doesn’t mean that you should.  Remember that you must believe that you can grow faster than the interest rate.  Otherwise, you are losing money.  

Small Business Loan Approval Rates
Small Business Loan Approval Rates

Given the low cost of capital to lenders due to the fed rate being extremely low, it is a very appealing time to alternative lenders. The spread between what it costs to acquire money is so much lower that what they can make by loaning it. SBA loan approval rates are just shy of 50%, while large bank approval rates are around 37%.  These lower rates are due to higher standards, but as a result, the interest rates are much, much lower.  

Loan Amounts

Technology companies lead the pack in terms of the average loan amount.  Retail is next, which is likely due to the need for working capital to cover inventory purchases. The remainder are low amounts, which also make them more attractive to smaller banks and alternative lenders. This means that businesses more likely to grow are those that are seen as less risky. 

The Average Loan Amount, which relates to approval rate drastically
The Average Loan Amount, which relates to approval rate drastically

Loan Approval Rates by Geography

The size of the loans varies dramatically by state.  The leading states has loan amount that are nearly double that of the national average. 

Technology – New Jersey 
      • State Avg. $251,250 
      • Nat’l Avg. $102,029 
Retail – New York 
      • State Avg. $121,867 
      • Nat’l Avg. $73,564 
Personal Services – Texas 
      • State Avg. $116,154 
      • Nat’l Avg. $52,989 
Restaurant – New York 
      • State Avg. $106,701 
      • Nat’l Avg. $59,746 
Business & Prof. – Massachusetts 
      • State Avg. $77,538 
      • Nat’l Avg. $43,248 
Healthcare – California 
      • State Avg. $66,010 
      • Nat’l Avg. $49,835 

These states are home to many immigrants and first-generation Americans, who are typically very entrepreneurial. They are also areas where the real estate markets are strong and businesses grow rapidly. Hence, loan approvals are at a rate different from elsewhere in the country.

Credit Scores

Surprisingly, the average credit score for all the industries was below the SBA and large bank thresholds of 680 and 700 respectively, meaning that the vast majority of small businesses are challenged to find affordable rates. Credit scores, both personal and business-related, are important to maintain in order to keep a company growing at a proper rate. But in order to qualify for a loan, it sometimes takes much more work than just having good credit. Being able to pitch yourself is important, as is how you talk to banks. But it is all important in order to grow your own business.

Credit score information, relating to loan approval rates and amounts
Credit score information, relating to loan approval rates and amounts

Summary

What these data shows are that loan approval rates are improving, mostly due to the fact, the interest rates are low.   As we’ve said many times in the past, being able to get a loan doesn’t mean that you should. Credit scores are still the major limiting factor to access to high quality, low-interest rate loans. If you are looking for credit and can wait a few months, then fixing your personal credit score will save you thousands in the long-run. 

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Small Business Lending – Traditional Loans

Traditional Loans

The Small Business Lending Ecosystem is getting crowded and more confusing by the day. If you’re scratching your head wondering which is right for you? You’re not alone. To help you out, all this week we will be talking about the small business lending world, and the ways in which you can learn more about the system for your own success. To conclude our series on the SBL system, we’d like to share a story about Dr. Acosta and his attempts to go about getting loans the traditional way.

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Dr. Acosta’s Story

Dr. Acosta ran a successful physical therapy practice. He serviced New York City, mainly in Manhattan. Dr. Acosta had been growing well. His rapid growth was causing some strain. He didn’t have enough PTs, equipment, and office space to take on any new clients. His growth was at risk of stalling if something wasn’t done.

A person seeking to get a traditional loan can still achieve that easily in 2019

What Did We Do for Dr. Acosta?

It was obvious for the start that Dr. Acosta needed to expand. Dr. Acosta’s business model was relatively simple. Dr. Acosta was in Orthopedics. His office and hospital clients provided a steady supply of post-visit/post-operative patients, who needed PT in order to regain or to improve their mobility and function. He knew and could forecast how much a PT an average client would need. Based on his current growth trends, it was easy to estimate how much additional capacity he would need. All we had to do was get it all down on paper in a formal that the loan underwriters and officers would understand and he would qualify. Dr. Acosta was a physician, not a banker so he wasn’t sure how best to proceed.

Small Business Ecosystem

So, which lenders were right for Dr. Acosta? How did we choose? Well, Dr. Acosta had an established business, which was profitable and growing. He had collateral in terms of his current and future equipment. He had a good credit score, enough to ensure his eligibility. 

Given these criteria, we decide to shop around the traditional bank and SBA route for the loan. Luckily, Dr. Acosta was aware of the expand before things became critical. This meant we had time to complete the SBA process. To ensure he obtained the best rates, we needed to do some comparison shopping. We chose to take to some local banks, his hospital credit union, and the lending platforms to see where we could find the best rates. His capital needs were high more $250K. Although they had the best rates, his hospital credit union couldn’t fund the full amount. A few of the lenders on the platform could fund the full amount, but the extra fees of using the platform negated the advance of their lower rates. Therefore, we decide to use a traditional large bank to secure the funding we needed, because alternative lenders could be too risky.

The Results of Traditional Lending

Dr. Acosta qualified and received the funding needed to expand. It took us a little over 3 months to close the deal, including our shopping time. We got the funding in time so that he was able to accept new patients before he hit capacity. Dr. Acosta was smart in not waiting until things became critical, which gave him the time needed to negotiate the best deal. He was able to get the lowest rate, which was roughly 4% over prime.

Small Business Lending — Starting with Loans

Starting with Loans

The Small Business Lending Ecosystem is getting crowded and more confusing by the day. If you’re scratching your head wondering which is right for you? You’re not alone. To help you out, all this week we will be talking about the small business lending world, and the ways in which you can learn more about the system for your own success. We’ve already told you about Tony’s attempt to expand his business and Tracy’s fight with poor credit. Today, we want to share the tale of Kayla, a business owner who owned a very new business and found herself starting to need loans in order to plan for growth in the future

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Kayla's Story

Being able to get a small business loan when starting your company makes a huge difference

Kayla had started a new boutique marketing agency. Her agency had been around for about a year, and its growth had been phenomenal. Kayla focused on Facebook and influencer marketing. She’s a whiz when it comes to using these platforms, but not a financial genius. Kayla’s growth was almost too much for her to manage. She knew she needed to build scale, but didn’t know how best to do it. 

Kayla’s story is a familiar one. Given Kayla’s time in business, she faced a dilemma, should she go for equity financing or debt? The question we asked was how much control of the business did she want to maintain, and how much additional administrative expenses did she want to accrue in managing shareholders and/or partners?

This answer is different for everyone. For Kayla, she wanted to keep control. She wanted to be able to take on clients with whom she wanted to work. She didn’t want to be forced into taking any client in order to grow quickly, and that meant starting with loans early to stay strong. 

What Did Kayla Do?

It was obvious for the start that Kayla needed to expand. Kayla had her business model down. She was a genius at what she did, but she didn’t know how to hire, train, and replicated the taskings that she was doing. We went through our keep vs. toss exercise with her. Based on her current growth trends, and what we uncovered during our keep vs. toss exercise, it became clear as to which positions she needed to hire and how much capital that would take. We need to get it all down on paper and in a format that we could take to lenders. 

Small Business Ecosystem

So, which lenders were right for Kayla? How did we choose? Well, Kayla was a new business. She was profitable, but didn’t have much in the way of collateral. She was in business a little over a year. Thankfully, she had a good credit score, but her short tenure was problematic. 

Given Kayla’s situation, we needed to explore our options carefully. Kayla wasn’t a good fit for a large bank loan nor did she meet the SBA criteria. Therefore, we had to explore alternative lending sources to start getting loans. Kayla needed about $50,000 in non-secured working capital. We knew we had our work cut out for us. 

What we did have were some great, flashy, testimonials that Kayla had created. These told a great story. We were able to cut these into a pitch video, which was perfect for the peer-to-peer marketplace lenders. We could use this powerful video to pitch the business on these platforms in order to find several lends who could pool their resources to fund a loan. Kayla was growing quickly and that trend was highly likely to continue. Therefore, we could afford the higher interest rates that loans tend to have.

How Kayla Financed Her Growth, Starting with Loans

Using the peer-to-peer lending network, we were able to find 3 lenders, who were willing to contribute money to support the business. The rate, 15%, wasn’t great, but it wasn’t terrible either since she was growing at about 125%/year. We were able to hire the workers needed. Once we had the new team in place, Kayla continued to grow. So, when she was ready for the next phase of expansion a year later, she was the ideal candidate for an SBA loan. 

We used that loan both to refinance her old debt and to use as working capital for her next growth phase.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Small Business Lending – Getting Loans with Debt

Loan with Debt

The Small Business Lending Ecosystem is getting crowded and more confusing by the day. If you’re scratching your head wondering which is right for you? You’re not alone. To help you out, all this week we will discuss the small business lending world, and the ways in which you can learn more about the system for your own success.

We will share Tracy’s story, and what we did together to figure out the right option for her. You see, Tracy had found herself in a decent amount of debt by this point in her business, and that made getting loans a bit harder. 

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Tracy's Story

Tracy ran a successful catering business. Her clients were mainly corporate and other small businesses, predominately servicing smaller events. As such, Tracy had solid growth. As she grew, her capacity was strained. Consequently, her overtime hours were up. Plus, it was hard to find enough equipment. Tracy rented certain pieces of equipment. Because she was catering more events, we agreed that it was more economical to purchase some key equipment instead of renting them. 

Unfortunately, Tracy hadn’t always been responsible with her spending in the past. Therefore, she built up a fair amount of debt. While her credit rating wasn’t awful, it needed some work. 

How Did We Help Tracy?

First and foremost, Tracy needed to expand. Tracy had her business model down. Her client retention rate was high. As a result, she could accurately forecast demand. Therefore, it was pretty easy to calculate which equipment would be more economical to own versus rent. Now, all we needed to do was to acquire the financing. Preparing the application and necessary paperwork was easy. However, the hard part was finding the right lender for her.

Getting Loans with Debt can be hard

So, which lenders were right for Tracy? How did we choose? Well, Tracy had an established business. It was profitable and growing. We could use the new equipment as collateral to support this loan. But, to obtain the funds, we faced some challenges, namely, the size or the load and her sub-optimal credit score.

Not a Good Fit for a Large Bank

Given these criteria, we explored our options carefully. With her debt load, Tracy wasn’t a good fit for a large bank loan. Plus, she failed to meet the SBA criteria. Therefore, we had to explore alternative lending sources. Tracy needed about $100,000 to purchase the equipment that she needed. Knowing that any lender would view her as a risk, we split our funding strategy into 2 pieces. First, we calculated how much we might be able to receive from the Marketplace lenders. Next, we figured out how we might finance the rest through a Lending Platform. 

Benefits of Being a MWBE

women-owned business has access to programs that wouldn’t normally be available. Therefore, we applied to non-profit lending sources, with low to no interest rates. A quarter of needed funding came from these lenders. For the remaining 75%, we chose use the marketplace lender, Lendio®. 

How Did Tracy Get a Loan with her Debt?

Small Business Ecosystem

Tracy got the funding she needed to expand. As expected, the interest rates weren’t great from the marketplace lenders. However, since we used the non-profit lenders, we reduced their impact. At the time, Tracy hadn’t certified her business as a MWBE (minority or women-owned business entity). We helped her with that application process.  As a result, she is now eligible for more government-based opportunities. With the purchase of the new equipment, her profits increased. She paid herself more and reduced her debt.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Small Business Lending – Loans to Expand a Business

Lending Expanding Business

We’ve already begun our conversation about small business lending, and how the field of it is growing more and more confusing as time goes on. The small business lending ecosystem is getting crowded and more confusing by the day. If you’re scratching your head wondering which is right for you? You’re not alone. We’d like to share Tony’s story, and what we did together to find the right options for him when he went looking for loans to expand his business

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Tony's Story

Tony ran a successful laundry service business. His clients were mainly corporate and other small businesses, predominately restaurants. Tony had been growing well. As he grew, his capacity was showing some strain. His overtime hours were up, and his laundry facility was running near its max. Tony is a cautious guy, and he was nervous to try and painlessly find a loan to expand his  business. He’s a smart businessman, but he has a bit of bank-phobia. He doesn’t understand all the jargon, thinks they talk down to him, etc. 

The first thing we said to Tony was: “You didn’t go to school for Finance, so cut yourself some slack. They wouldn’t understand why you use detergent X for client Y, so they’re no different from you. They just have different skills” Tony agreed, and this started the process of helping him become more comfortable and at ease with the process. 

What Did We Do with Tony?

Working together, we'll be able to help you expand your business

It was obvious from the start that Tony needed to expand, and a loan would help his business. Tony had his business model down. He could tell you to the penny where everything was spent, and he knew and could forecast how much a volume an average client would need. Based on his current growth trends, it was pretty easy to estimate how much additional capacity he would need. All we had to do was get it all down on paper in a formal that the loan underwriters and officers would understand. The most important things to qualify for a loan are usually an income statement, balance sheet, and cash flow.

So, which lenders were right for Tony? How did we choose? Well, Tony had an established business, which was profitable and growing. He had collateral in terms of his current and future equipment. He had a good credit score, enough to ensure his eligibility. 

Given these criteria, we decide to shop around the traditional bank and SBA route. Tony waited a little too long to expand so we needed the SBA process to go as quickly as possible. To do that, we needed to make sure that we had all the boxes check before we submitted the application. There are a lot of little things that can hold up an application. It’s good to have all those fixed beforehand. 

Finding Loans to Expand Businesses

Tony found the loans he needed to expand. It was a little later than we hoped, but an SBA loan is never fast. Luckily, the overtime hits and capacity crunch was manageable, but we weren’t able to bring on new customers until our capacity was in place. Once we had the new equipment on-line and workers hired, we back on a growth track. Tony has since learned not to be so hesitant about getting capital that it puts him in a bind. He’s since got another loan for more equipment, but this time he did it as soon as he started to see the signs of capacity pressure.

An example of how you could expand your business, given the seed money

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

The Small Business Lending Ecosystem – What to Know 

Small Business Ecosystem

In recent years, there has been an explosion of small business lenders (SBL). And this is a good thing, for sure! But buyers should beware. For some businesses, loans provided by alternative lenders is a godsend. But for other businesses, it could be a one-way ticket to bankruptcy. Over the next few days, we at ProStrategix want to explain all the different concerns and successes that the small business lending ecosystem can provide. From businesses in need of economic help to those that want to look outside of the traditional banking system, small business lending is something worth considering for your own business. 

Thinking about making changes to your business? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

What is the Small Business Lending Ecosystem?

First and foremost, we wanted to provide a quick snapshot & overview of the SBL ecosystem. This graphic from Business Insider is a wonderful explanation of the many kinds of lending.

A chart from Business Insider depicting the small business lending ecosystem

The graphic provides a way to look at the different types of lenders by class. Let’s go through a quick rundown of what each of these categories are in this small business lender ecosystem.

Balance Sheet Lenders

Kabbage, an example of a small business lending group in the ecosystem

Small business owners probably hear enough about balance sheets, but let’s translate this bank-speak into plain English. Essentially, these lenders mean the bank won’t sell your loan. Many lenders sell loans to others at a discount to reduce risk. As a consequence, balance sheet lenders are more cautious and will go through more scrutiny since they are the ones carrying the risk. The SBA was created in part to help mitigate some of this risk, and many of these lenders will steer you to these products.

Marketplace Lenders

These lenders, also called peer-to-peer lenderspost your application to their network of investors. Interested parties will be aggregated into a final loan offer. Since the risk is distributed, these lenders tend to be a bit more forgiving with respect to credit score and time in business. However, you will pay for that generosity through generally higher interest rates.

Lending Platforms

One example of a company in the Small Business Lending Ecosystem

These are platforms where an algorithm reviews metrics from the application to match borrowers to particular lenders. This provides an opportunity to comparison shop across a broad range of lenders and loan products. This can be helpful for people who don’t have time or the expertise to comparison shop on their own. While these are helpful, they are limited to the number and types of lenders in their network. They are typically alternative lenders, which mean higher rates than a traditional bank. There will be a service fee attached to the loan as well. 

Payment Companies

Paypal, an example of a small business lending group in the ecosystem

Payment companies are also getting into the act. Paypal and Square are also offering loan products. They are relatively new, but also offer small businesses an alternative route to traditional lending in this ecosystem.

In Conclusion

Our next series of blog posts will speak about how we used this ecosystem to help a number of our clients in different stages of growth. There is not a one-size-fits-all approach to the SBL ecosystem, so each business should carefully consider their options before making any decisions.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Get Capital Without Getting Clobbered

Get-Capital-without-Getting-Clobbered

As we said in our post, “Small Business Lending is Booming”, the market is awash with capital. Just because you can get capital, doesn’t mean you should. It can be risky, and some loans are more dangerous than you might think So, how can you get capital without getting clobbered?  

In fact, Kabbage just got $200M in funding to support its AI-based small business loans. When the market is saturated with capital, lenders start making riskier loans. Riskier loans mean higher interest rates, for example. Follow our three simple steps to know how to say afloat. 

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a FREE thirty-minute consulting session. 

First, can you grow faster than the interest rate being charged?

How do you know? Simple, what’s does your business plan project? Don’t have one? Write one.

Right now, small business lenders might be more willing to allow less thorough plans or none at all. You might think that’s a good thing, but it’s not. Remember, if you can’t grow faster than the interest rate, you’re losing money. Defaulting on easy capital is just as damaging as defaulting on hard. In other words, that’s the first way you can get capital and get clobbered.

A business plan requires a business model. Your business model can tell you whether or not you have a good chance to grow at the rate you need to grow in order to beat the interest rate. With one, you’re much more likely to be able to get the right capital without getting clobbered.

Second, how is your credit?

It’s unlikely that you will qualify for a low-interest rate with a small business lender if your personal credit score is less than 700. We’ve heard of lenders now willing to give capital to people with scores as low as 600.

While it may sound like it’s a great thing to give people a chance, unfortunately, it’s not.  They’re not going to give you the capital for free. A lower score will mean higher levels of interest. 

This takes us back to our first point. You can get clobbered if you get
capital at a rate which is higher than you can grow. If you can, you would be
better served to fix your personal credit before you seek capital.

Having a high credit score is the second thing that can help you get capital
without getting clobbered.

Lastly, What’s your debt cash ratio (DCR)?

Your what? This is basically a fancy term which looks at how large of a loan you can reasonably afford based on your size.

See our post “Small Business Lending is Booming” for the formulas to do the calculations. If you fail those fitness tests, then perhaps you should explore other options.

Being overleveraged is the final way you can get capital and get clobbered. It limits your options later if there is a downturn or a slowing of your growth. Since you’ll still have to pay back the debt, you’ll have less cash on hand for everything else.

You can really get clobbered if you gave any personal
guarantees to get that capital. Why? Because now your personal possessions are
at risk. If you’ve been
in business less than 2 years and/or you lack collateral to offset the debt,
you may be forced into this position.

Being
properly leveraged is the final way to get capital without getting clobbered.

If all of this has made your head spin, you’re not alone. Unfortunately, this is really important to understand. The last place anyone wants to be is swimming in debt from a small business lender. 

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

3 Golden Rules to Nail a Pitch

golder rule nail pitch

It’s amazing how many pitches are wasted. They could have easily been saved by following these three golden rules to nail a pitch.

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

First Golden Rule to Nail a Pitch: Have an elevator pitch that is less than 10 seconds

First, investors are busy.  They hear thousands of pitches every day.  If you can catch their attention in the first 5 seconds, you’ve succeeded at the first golden rule to nail your pitch.  If you can’t communicate the essence of your idea in less than 20, you’re sunk.  For how to write a pitch, see our post “How to Write an Elevator Pitch in less than 10 minutes”.

Have a pitch deck with no more than 10 slides

Second, you have to prove that you’re worth an investors time.  If they are leaning in after the first 2 slides, you’ve nailed the second golden rule to nail your pitch.  If you take more than 15 minutes to get your idea across, say thank you and leave.  Remember this simple fact: The person who does the most talking is losing.

Have a complete business plan ready

Finally, it all goes back to valuing the investor’s time.  He or she doesn’t want to have to work to make sure you have your ducks in a row.  Producing a plan when asked means you’ve just nailed the third golden rule to nail your pitch.  Time is money to you as well, so any lost pitch is money thrown out the window.

Fortunately, you don’t have to do this by yourself.  At ProStrategix, we offer fundraising advice and guidance for those seeking to raise capital.  We also provide some free do it yourself tools. For other free tools and classes, you may want to visit your local chapter of SCORE.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

How to Write an Elevator Pitch is Under 10 Minutes

elevator ptich

A strong elevator pitch is a primary tool when looking to raise funds.  Most entrepreneurs are so passionate about their ideas that it is really very challenging for them to write their elevator pitch succinctly. 

So much is exciting, and everything is important.  However, an investor is only interested in two things: Is the idea unique and differentiated?  Is it feasible?

We offer a simple hack below. Other sources, such as Business News Daily, offer a more elaborate approach. Which every you chose, and effective elevator pitch is critical to the fundraising process.

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Simple Hack to Write an Elevator Pitch

Here is a simple hack to writing an elevator pitch which gets to those two points quickly and clearly.  It’s just two sentences, but they contain all the information a potential investor needs.

[Enter Company Name] is the ONLY [Enter Industry or Competitive Set] that provides [Unique Point of Difference].  That’s because [Support Claim #1] and [Support Claim #2].

That’s it.  Done.  Let’s look at an example of a fictional elevator pitch for an electric car.

An Example of How to Write an Elevator Pitch

Turbo X is the ONLY electric car that provides zero carbon emissions without sacrificing performance.  That’s because our patented engine design, which provides rapid acceleration, and our patented battery, which provides up to 300 miles/charge.

See how succinct that is.  In less than 5 seconds, you’ve conveyed how you are unique and why.  You’ve also proven your knowledge of the key drivers and needs of the category.  It shows your mastery of both.

Key Points: Knowledge of the Category, Company, and Its Unique Place within it.

Of course, it implies that the investor is knowledgeable about the category, but you shouldn’t be giving an elevator pitch to someone who isn’t.  They aren’t likely to invest in industries in which they don’t have experience.

The key to writing such a clear elevator pitch is to know your company, your market, and your unique position within it.  That can be the tricky part.  This requires a solid business model and competitive assessment, but it is well worth the time and investment.  Without it, your elevator pitch will not be as powerful as it should.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

3 Avoidable Mistakes that Can Blow Your Pitch

mistakes that can blow your pitch

The team at ProStrategix has attended countless pitches, and we’ve found that the 3 most avoidable mistakes that can blow your pitch are outlined below.

Your business is doing well. But what’s next? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Having an elevator pitch that is more than 5-10 seconds

Investors are busy.  They hear thousands of pitches every day.  If you can’t catch their attention in the first 5 seconds, your chances of being heard drop dramatically.  If you can’t communicate the essence of your idea in less than 10-15, you’re sunk. This is the most avoidable mistake that can blow your pitch.

Having a pitch deck with more than 10 slides

As above, investors value their time, and you have to prove that you’re worth it.  If they are not leaning in after the first 2 slides, you’ve likely lost them.  If you take more than 15 minutes to get your idea across, say thank you and leave.  Remember this simple fact: The person who does the most talking is losing. Doing the most talking is an avoidable mistake that can blow your pitch.

Failing to have a complete business plan ready

It all goes back to valuing the investor’s time.  He or she doesn’t want to have to work to make sure you have your ducks in a row.  Failure to produce a plan when asked means you’ve just wasted your pitch.  Time is money to you as well, so any lost pitch is money thrown out the window. This is easiest mistake to avoid so you don’t blow your pitch.

Fortunately, there are people who have been here before and can help. The key is figuring out whom you can trust.  At ProStrategix, we offer fundraising advice and guidance for those seeking to raise capital.  For other tips, you can check out Techstars Entrepreneur’s Toolkit. If you are looking for more hands-on assistance, ProStrategix can help.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.