The Best-Case Scenario Trap!
I recently attended a startup conference in Detroit, and it was very evident to me that many of the pitches delivered by business owners and entrepreneurs were “Best-Case Scenario” presentations. Although it is OK to be positive about your business, the reality of entrepreneurship is an entirely different animal. For investors, the “Worst-Case Scenario” is the “Best-Case Scenario”. In other words, investors must consider alternatives to the optimal outcome. Not because they foresee failure, but rather because they must assess risks and account for the possibility of failure.
If your investor presentation accounts for the Worst-Case Scenario, and the business is still viable, it will pass the risk analysis with flying colors. As an entrepreneur, your business is the deal of your lifetime, but for investors, it’s just another deal. As the old saying goes: “Business opportunities are like trains, there will be one every ten minutes”.
Here are some power tips when preparing for a conversation with investors:
- Plan A does not always work (most often it does not), so make sure you have plan B, C, and sometimes D, as well. While you may never need plan D, it is essential to be prepared. For most entrepreneurs, plan A is the only plan and this is not a realistic approach.
- Hope for the best but plan for the worst – it does not mean you are being negative; it shows maturity and responsibility and elevates your credibility.
Remember, “hope” is not a management strategy – investors are ultimately seeking returns and want to see the path to success.
- Do your own S.W.O.T analysis – remember the statement “We do not have any competitors” is always false!
Investors are investing in people. Make sure you are investable.
Know when you are ready, go all out, and swing for the fences. Success is waiting. Do not be late.