As an entrepreneur, you know that failure is always right around the corner, and you know that it can either be devastating, or it can be a stepping-stone to success, depending on your perspective and preparations. In the entrepreneurial world, failure is always with us, and we learn to embrace it for everything that it can teach us, but that doesn’t mean you should go out and grab it.
Unfortunately, I see way too many entrepreneurs do this every day. Just by making one of the statements I’m about to list, you’ll basically be shooting yourself in the foot with your investors.
“I Don’t Have Any Competition.”
Yes. You. Do. Seriously, you might not have any competition yet, but even if that’s the case, you’re going to have competition the minute you launch. Saying that you don’t have any competition just tells me that you haven’t studied your market at all.
For example, let’s say that you’ve found an amazing location where you want to open a bicycle shop. There isn’t another bicycle shop within miles, and you have tons of mountain bike trails and gorgeous open roads around your location. You don’t have any competition, right? Wrong.
You might not have any competition from others in the bicycling industry (yet), but you definitely have competition in other recreational, sporting and fitness industries. Your competition includes snowboarding, skiing, inline skating, CrossFit, running — and all of the other sports and fitness hobbies that people have access to in your area. If you don’t recognize that when you pitch your shop to me, I’m probably going to pass.
“My Friends and Family Love It!”
That’s great. My friends and family tell me they love my cooking, too, but that doesn’t mean you want to give me a job as the head chef at a Michelin-rated restaurant. If your market testing only extends to your friends and family, then you’re not ready to pitch your idea yet. Don’t stand up in front of investors until you’ve done the research to show that there’s a real market demand for what you have to offer.
“This Idea Can’t Be Copied.”
Do you have anything at all to back that claim up? Because, in my experience (and every investor’s experience) — yes, your idea can be copied. In fact, who’s to say that someone else isn’t developing something very similar right now? If you can’t account for copycats and competition, then you’re going to be dead in the water.
“This Is Going to Change the Whole Market!”
Don’t tell me that your new technology or innovation is so groundbreaking and unique that it’s going to completely disrupt the market. Martin Zwilling put it beautifully when he wrote for Forbes, “Investors will fear that neither they nor you can afford the time and marketing required to weather the change. They will likely decline on the basis that, historically, pioneers get all the arrows.”
“You Can Expect a Profit in a Year or Less.”
Unless you have real numbers to back this up, don’t ever make this claim. Very few companies are profitable within the first year, and when entrepreneurs claim that they’re going to buck the trend and make millions in no time, investors get very, very suspicious.
Avoiding these five hugely problematic statements when you pitch your idea won’t guarantee that you’ll get funding. It will, however, show that you’re ahead of most new entrepreneurs. Believe it or not, a lot of people make these claims every day, and a lot of otherwise great ideas never get funded because of this. Be a savvy entrepreneur — side-step these newbie mistakes.