I have reviewed a range of business proposals for funding recently. What struck me (again) was the narrow view inventors and entrepreneurs have of their products.
“My product is the best, because of these features…” and then they go into a list of features.
Benefits not Features
Every marketer knows that saying: You have to show the benefits, not the features to find a buyer.
The same is true for finding investors. What are the benefits they are looking for?
- A great return
- Low risk
How can you show that?
A Great Return
There is no guarantee in company returns, especially in early stage ventures. However, there are some things that make a great return more likely.
My first focus is to find out whether there is a need? Not just by one single person, but by lots of people.
This is a complete shift in mindset for many inventors. You need to think like a marketer and understand your market (or find people who can complement your lack of skill in that area).
The second question I ask is whether the new product fulfills the need or solves the identified problem in an economical way?
That does not necessarily mean cheap, but the figures have to stack up on a per unit basis with quantities that look feasible.
I only know of one way to lower risk in early stage investing: having written orders. This is not to say that other risk reducing measures do not play an important role as well. But if I see that orders have been placed already or that future clients have made other substantial commitments, I am more at ease with the investment.
If on the other hand anyone tells me about a billion Dollar market, the risk is higher, because it means they have not identified specific clients and realistic quantities. I have seen forecasts that did not even include any marketing expenses.
No matter how good the product, clients will not beat a path to your door. Great marketing on the other hand can push a mediocre product to success.
I have written before about why I think that business plays the most important role in bringing sustainability forward. In addition the pragmatic reality is that businesses which are not sustainable will not survive much longer.
Ideally the invented product or service is a large step forward (and here the inventor might be tempted to talk about the features), but the running of the company itself needs to be sustainable as well.
If you are a tempted inventor who want to talk about the sustainable benefits in terms of savings in greenhouse gases, water or waste, focus on how that relates to monetary savings for your clients.