One of the most enjoyable parts of my job is appearing at events involving an “elevator pitch” competition, where hopeful entrepreneurs extol the virtues of their business idea.
These events are both joyous and frustrating at the same time; there is nothing more joyous than listening to entrepreneurs explaining how they are going to change the world. What is frustrating is that few people have worked out how to pitch their ideas in a simple form.
Organisers are always at pain to explain that their event is not supposed to be like the television programme Dragon's Den, a combination of entrepreneur humiliation and the hubris of the panel, as much to do with real entrepreneurship as The X-Factor has to do with the Beatles, as I said in a previous column.
The events I appear at are all about providing useful input to the people pitching; everybody needs a good elevator pitch for themselves and their business, if only to be more interesting at social and business networking events. The first thing I explain is that that the elevator does not get stuck for several hours; you have to keep your pitch short and simple.
The worst culprits are inventors, engineers and technologists who feel that they have to cram as many features as possible into their three minutes. In sales, there is the well-known concept of “golden nuggets”, as many as fifty amazing features of your product which have been lovingly crafted into product literature by your marketing team.
The problem is that most customers have very short attention spans and can only remember three things about your product. As soon as you mention the fourth golden nugget the first and probably most important one drops out of their active memory. By the time you get to nugget number fifty, all the most compelling ones have long since gone, and the prospective customer has also lost the will to live.
It is important to realise that the objective in delivering an elevator pitch is not to secure an order there and then; the best you can hope for is to stimulate enough interest for them to give you another fifteen minutes and to hand over their business card.
The methodology for a good elevator pitch is very simple, and centres around five Ps: pain, premise, people, proof and purpose.
The most important question for any would-be entrepreneur is "where's the pain?" What pain or problem do you plan to solve? The larger the pain, the more likely people are to give you money to take it away. Pain can come in many forms, but if your product or service saves time and money that is a very good start.
Next you have to explain in simple terms the premise of your business, exactly what you do. For this, you need to be literal and not descend into sloganeering. "We transform people's lives" is laudable but impossibly vague. "We are an excellent training company, specialising in communication skills" is much more to the point.
If you feel that this is too obvious, then I suggest you visit a trade show and try and work out what each company does, just from the text on their display stands. The worst culprits are being deliberately vague in the hope your curiosity will be aroused, encouraging you to approach someone on their stand to find out what they do. Unfortunately, the vast majority of people will not bother.
The other Ps are very straightforward. You need to talk about your people, as entrepreneurship is a team game. Every investor says they look for a credible team rather than a good idea, and every customer says they buy from people not companies.
Proof is the hardest to provide — why anyone should buy from you and not your competitors. Even if you have the best team and products in the world, customers can still be sceptical, and the best proof is examples of your happy customers, in the form of relevant case studies.
The final P is purpose, and the most important purpose of any business is to make money. Potential investors will be looking for a return on their investment, and prospective customers will want to know that you run a sensible and profitable business, to ensure reliable and consistent delivery of your products and services.
This should provide the basics for delivering a good elevator pitch.
Originally published in The Financial Times. Copyright ©Mike Southon 2012. All Rights Reserved. Not to be reproduced without permission in writing.
Mike Southon is the co-author of The Beermat Entrepreneur and a business speaker.