Anyone who is starting or maintaining a business understands the importance of pitching. And in a less than ideal economic environment, the ability to pitch your business and gain funding can make or break your business.
Strangely, entrepreneurs often overlook their networks closest to home in favor of those that (they think) can provide important connections, investment dollars, and immediate business. While that may be the case, the reality is that you cannot be certain if your pitch will resonate with investors. And in some cases, the investment requirement or share in your business isn’t ideal if you want to retain full control and autonomy.
Why you should pitch your business to friends and family
That’s why it’s just as important to pitch to and seek the support of friends, family, and the community around you. Here are a few reasons why:
They know and trust you
These are the folks who know you at your core and can vouch for you. Unlike pitching to investors, you don’t have to prove yourself to your loved ones; you only have to prove your business and its value.
This also extends to your broader community. More than likely it’s still people that know you well but who may be willing to provide more constructive feedback on your pitch and overall business.
They can bring in business
Word-of-mouth is a very powerful form of advertising. In a Nielsen study, 82 percent of Americans said they seek recommendations from people they trust when making a purchasing decision. When you educate those closest to you, you not only increase the chances of gaining business from them, but you also empower them to be advocates and recommenders of your business.
It builds up the community
Small businesses are the lifeblood of local communities. For every $100 spent at a local, independent business, at least $68 is returned to the community. Pitching your business to and garnering support from your closest networks benefits both you and them.
It provides proof for other investors
Friends and family are your greatest advocates. If you’re able to garner their support it not only brings in potential customers and funding, but also helps display that your business is viable to traditional investors. More than likely if your pitch isn’t incredibly tight or you don’t have extensive financial forecasts or market proof, it’s going to be difficult to get investors to make the first move.
Simply by making traction with your closer connections, this can elevate your pitch and give investors a better reason to invest. They now know there’s interest and that you have support, which can go a long way.
How to pitch to friends and family
Sometimes, pitching friends and family can be more difficult than pitching to absolute strangers. It may feel intrusive to ask or even feel like an obligation, but the reality is that friends and family should be seen as one of your first investment options.
Whether you’re a budding small business owner or a serial entrepreneur, we’ve nailed down a few strategies to start talking about your business with your friends, family, and community.
1. Customize your elevator pitch
Business owners should always have an elevator pitch ready for any occasion. Whether you’re talking to a friend or stranger, humans maintain an attention span of about eight seconds. It’s important to succinctly describe your business model, your market opportunity, and your value proposition. Focus on explaining what your business is and why it’s important to you.
Pitching to your hairdresser looks different than pitching to your wealthy uncle, so customize your spiel to ensure your pitch is relevant and interesting. For example, when speaking to friends and family with no business experience, avoid using industry jargon or acronyms that they may not understand. You have thirty seconds to trigger interest, so use them wisely. If you’d like to learn more, you can prepare and practice using our Elevator Pitch Guide.
2. Engage friends and family with relevant experience
If you’re preparing to pitch your business for the first time, seek out well-connected friends, family, and members of your community who have experience relevant to your business. Starting with those who understand your business or industry can not only ease your pitch conversation but also open the floor for business advice and guidance.
Jennifer Hamley, founder, and owner of JenniferHamley.com leaned on her friends’ and family’s connections when she achieved the 2015 Independent Handbag Designer Awards in NYC. Handbag production needed to increase quickly, and “friends and family rallied and linked me with people in the industry,” Hamley says. “Manufacturers, suppliers, international shipping experts…I was amazed by the wealth of support and knowledge that came to light.”
People who have relevant experience and connections are also the most likely to bring in new business and reliable expertise.
“I have friends who are genius social media marketers, seasoned business owners, etc., and when I ask them for help, they are excited to be able to provide their expertise,” says Matthew Walrath, owner of Life Balanced Consulting. “I’ve had other friends with established businesses refer old employees or contractors who did great work for them, which saves me the headache and time suck of having to interview multiple candidates.”
In your quest to build connections, remember that the endgame is overall success, not just money.
3. Evaluate financial availability and ask for support in affordable ways
Evaluate which of your friends and family could best afford to help you. Don’t waste a potentially tough conversation on a friend or family member you know isn’t in the best place to support you, regardless of how much they want to.
Additionally, be sure that you outline specific financial options when asking for any funding. You wouldn’t go to a bank asking for a blank check so you shouldn’t do that with your friends or family either. Carefully explain how you’ll use the funds and outline different milestones you anticipate reaching.
Also, don’t limit your pitch to financial support. Let your loved ones feel they can help you in the form of time, energy, or manpower. Deborah Sweeney, the founder of MyCorporation, says that her friends and family are her biggest supporters. “[My husband] always has ideas for promotions, clients, and partners. My dad does document delivery, and my kids help file documents. Some of my biggest referral sources are my friends!”
4. Make it official
If you are discussing monetary support, don’t rely solely on a handshake for any deal, especially one made with friends or family.
These relationships are the most fragile as they’re built on a deeper, more personal foundation. Respect the risk and draw up a formal contract that clearly outlines expectations and holds everyone accountable.
5. Keep communication lines open
Don’t limit your pitch to a one-time conversation. Continue communicating the status and success of your business to your friends, family, and community. If they are invested monetarily, keeping them updated is a must, whether in the form of regular emails, one-on-one calls, or monthly support.
You can also consider social media and email blasts as ways to pitch your business and update your community. Consistently communicating about your business is a way to keep you front-of-mind and open to referrals.
6. Outline your business clearly
Putting a business plan together can be intimidating, but it’s crucial in outlining and communicating your business goals and potential success. Many startups think about writing a business plan when working with financial investors, but we believe they’re just as important when pitching friends, family, and your community.
There’s a lot that investors want to learn from your business plan. Don’t assume that your community already understands the problem your business is solving, what kinds of customers or clients you’re seeking, or how you’re marketing. Sharing your business plan with your friends and family not only increases the chances of gaining business from them but also equips them to be advocates and recommenders of your business.
While most friends and family won’t want to read your entire business plan, you should be prepared to deliver your executive summary. Think of it as a physical elevator pitch for your business that runs through top-level information regarding your target market, financials, and overall strategy. Having a thorough executive summary adds credibility to your idea and showcases forward-thinking on your part.
Developing a business plan to help your pitch
What’s the best way to develop and share your business plan with friends, family, and your community?
Of course, here on the LivePlan blog, we recommend using a business planning software like LivePlan. LivePlan is an easy, approachable way to not only brainstorm and draft your plan but also share it with others without extra design work. You can even share your plan with friends and family to view or edit directly within the software. If you’re not quite ready to take the plunge, we also have a free planning template to help get you started.
As you work hard to build important connections, fund your startup, and generate business, don’t overlook the networks closest to home. Sure, your friends and family may not be investors looking to give you millions, but they’re sources of support nonetheless.
Pitching to your friends, family, and community may benefit you financially, but it can also bring in new business and connections you would’ve otherwise never had. Bridge the gap, share your business plan, and start pitching your business to those around you.