Business Pitching and Financial Presentations - how much detail?

In My Humble Opinion
1

So I am going to pitch my business idea soon - it’s not really to VCs, but an entrepreneurship programmee through a school, but still this is my second time only, so I am still new to having doors slammed into my face :slight_smile:

One question which I couldn’t really find an answer to is how much detail do I need to put into the financial part of the presentation. There’s the cash flow, profit and loss, balance and break-even analysis. I guess the break-even is a must have.

One of the selling point of our venture is the low cost, so I would like to point that out by being more thorough when presenting the expenses, but I am likely to run out of time (I think we only have 15 minutes).

Anyone been through this before? Any suggestions?

2

I’m doing this right now (for the fourth time).

In terms of detail you should be able to show that you’ve thought through not only the business, but the target market, its demographics, and evidence of future activity and a potential out (that is, how your investors will be able to recoup their investment in 3-5 years or so).

And you can’t have enough financial details. You want confidence in those numbers and to know them inside and out. The worst thing that can happen is that someone asks you a finance question that you don’t have the answer to.

3

Here’s what you do. Usually in real life you’ve only got 15 minutes to pitch. Make sure you’ve got the 15 minute oral pitch down pat.

Big hint: do **NOT ** read your slides
Second hint: Do **NOT ** read your slides
Third hint: Do **NOT ** read your slides

Garhhh, this is the kiss of death in a presentation. Remember, you are presenting to people presumeably smarter than you (or at least let them think that is true), and they know how to read. Think of your pitch as presenting the oral piece combined with the powerpoint piece. Summarize with the oral part and have a lot of the detail on the slide, but don’t talk to it unless there is interest or specific questions.

Then, make sure that while your presentation is 15 minutes long, that your appendix is about 2 hours long. In a 15 minute pitch, all of your slides should be summaries with 1-2 real points per slide. Then if you get a question, curve ball, request for detail, you then fast forward to appendix D: the financials, with all of your carefully prepared backing documents. Presumeably, when you make your business plan, you’ve got all this information and detail. Park it here in the appendix for if you need it.

Make sure if your low cost is a selling point, that you’ve got the return side worked out as well. Pitch it as a good viable business with real returns based on blah blah blah, and to make it even better the cost base is low. Don’t sell it as low cost. Sell it as a good business return, and one reason is because of the low cost.

Run a math checker and spell checker. You have no idea how many executives in a presentation will completely rat hole on a simple math mistake, and you will lose all credibility. There’s still an old guard out there that thinks if you’re too lazy to run a spell checker, you’re not to be trusted with money.

Final hint: if the presentation gets off on the wrong foot, they ask you all sorts of surprising curve balls, and you’re digging yourself deeply into a quicksand quagmire – call a time out. Respectfully request the audience for an opportunity to go do additional homework and later make a second presentation. You’ve got a good business case but this is your first time doing something like this, and the experience so far in the presentation is invaluable. You know you’ve got a good case but didn’t present it in the way to reach the current audience.

4

I am NOT an expert on this, but here is what I’ve gleaned from what I’ve read. The number one question you want to think about is: “who is my audience, and what is in it for them?” If they are a potential investor, stop for a second and put yourself in their shoes. What would YOU want to know about the venture.

Don’t focus on thorough. Focus on telling a story that will draw them in. If they have questions, THAT is when you get into detail.

I’ve found Guy Kawasaki’s book “Art of the Start” to be extremely helpful about this. He says that ANY business should be presented in 8 slides.

5

I really don`t agree with this at all.

Is it really a 15 minute presentation or 15 minutes with questions? Even at 15 full minutes, you dont have time to delve into your financial plan. Lot's of numbers are awkward and confusing and nobody seeing a presentation reads them that closely. In terms of presenting your financial projections, all you really need is revenue, gross margin, and EBITDA. You can add in a couple more numbers if you really want, but dont go wild. 2-3 previous years and 3-4 pro forma years.

On the other hand, if you really think your venture can be started on the cheap, go ahead and make a slide highlighting that. Is there something inherent about your business model that makes it inexpensive to start up? Or have you just convinced yourself you can?

But don`t feel the need to explain everything in numbers and more numbers. Just tell them why it’s going to be inexpensive to start. If it’s believable, and you are believable, that’s good enough to pique interest and satisfy the presentation.

You should, of course, have everything backed up by thorough projections. I’m assuming you’re just questioning what to actually present.

6

I’m sorry, I never come across EBITDA before. What’s that.

It’s 15 mins presentation, plus a 45 mins Q&A.

The business is web-based, and we are sticking to Open Source technology, and we have one or two PHP guys full-time to customise it and make sure it works. The cost is about USD 4000 per month. It’s a big draw – as it is mainly a one-time software/machine cost, then the rest are labour. I’m from Singapore, by the way, where programmers are paid dirt-cheap (less than USD 1000 a month…)

So in short, I have to convince them of the low-cost, and that it is low because I have already went through all the so-called ‘hidden costs’, like paying for an external auditor, accountant, legal consultancy, manpower, pension, utility claims, transport claims and etc. The panel wasn’t that convinced the other time as I didn’t talk about those costs, so they ask me to do a more thorough check.

How can I best do that?

7

EBITDA = Earned Before Interest, Taxes, Depreciation, and Amortization. Basically, it allows the company to present how profitable it can be along with its ability to service its debt.

As for the finances, I don’t mean you should present all that data. But have it available. Especially if there’s a 45 minute Q&A (something I’ve rarely gotten in front of VCs and Angels). Given that much time there WILL be at least one guy who wants to dive deep into your financials and projections.

8

Right, it’s Earnings Before Interest, Taxes, Depreciation, and Amortization. But don’t use it if you’re not comfortable with it or explaining why you used it. Just use whatever measure of profitability you are comfortable with. They shouldn’t be substantially different. I’ll try to answer your other question later today when I have time.

I completely agree with Jonathan Chance that you should be ready to answer any question about your financial projections.

9

What is it about your business that let’s you start up cheaper than competitors? Do your programmers have enough experience and talent that you can use the open source applications better and faster than the other guys? Or are you competing globally with competitors without access to cheap programming? If you’re convinced this is a competitive advantage to you, you should present it that way to investors and be ready to back it up. It’s not an advantage unless others can’t do it too.

On the other hand, it sounds like the same panel wasn’t satisfied with your previous pitch, at least with respect to operating costs. To satisfy them you should ignore my earlier advice and go into more detail on them.

I still wouldn’t advise you to always include that detail though. I have to wonder what happened last time. Did you really need to learn more about those costs? Would you say your perception changed after they sent you checking? If you feel you learned a lot, then in the future you should be able to present the basic financials confidently knowing they’re backed up.

Or maybe you did a thorough check on your numbers and youre convinced you had it right the first time. Then I'd have to wonder if they just don't believe you can do it that cheap? Maybe you're right and they're wrong - but you should seriously consider the possibility that youre just seriously underestimating your operating expenses.

Obviously that’s speculation, I don`t know your business or exactly what they said to you.

In short: present all the evidence you found proving your claim, they’re expecting it. Next time you present to someone, stick to the basics and present your financial projections confidently. Be prepared to defend your low cost claim if anyone asks for support.

10

Actually, what happened last time is that the person in charge (a business lecturer) says “Here, use this format for the presentation; you are good to go if you can answer all the questions” and advise us to cut back on the financial details – which all turn out to be bad advice.

We are confident of the software/people costs - the advantage is really in that those tools are one-time cost, but allow us to develop e-learning courses quickly, and we are the content expert. What they wanted us to find out is all the so-called ‘hidden costs’, like insurance, utility fees, rentals (a moot point, since we work from home, but we didn’t state that, to be fair), trademark, incorporation fees etc.