1. The importance of networking
2. How to pitch your start-up to investors
3. Important marketing tools and how to use them
1. The importance of networking
While studying at Haaga-Helia, I've heard multiple times how important it is to network effectively for our future working life and the quote 'your network is your net worth' has become widely used. For start-ups this is true even more. Dreamstake says the following about why to even bother with networking: 'You are an entrepreneur and you have an idea that you think will change the world. However, at this stage no-one knows you. They listen to your pitch and like what they hear but it takes lots of trust either to join your team or to invest in you. Therefore unless you happen to have enough funding to build a team you need to get to know people. This does not happen overnight. However, you don’t have any money. You have to buy people into your vision or they won’t be prepared to help.'
Networking is a wide topic and it important to define it a bit more. According to Forbes, there are three main types of networking:
- formal (businesses hubs, accelerators, events that are specifically created for this purpose)
- informal (parties, informal events, gaining contacts through friends and family)
- digital (using social media and platforms specifically developed for this purpose- nowadays mainly LinkedIn)
Even though the most contacts can be found from the internet, Forbes states that the most effective contacts, which actually can help businesses to grow happen through informal networking. They've done an extensive research among starting business that have succeeded and 78% of those have listed the informal networking as the main source of success for them.
At the early stage, the main problems businesses may face are lack of financing, complex regulations, weak support from the government or fear of failure. All of those can be helped through an effective networking.
The Entrepreneur states who are the main groups a company should identify and focus on while networking. Each group requires different approach.
- potential customers- they might help the company in decision making. Companies should always listen to their customers and adjust their business to them, also potential customers might know other customers and this is an easy ways for the company to grow the customer base.
- even at an early stage, companies should try to find partners, especially those, who know the customer base and may help the business to grow.
- with investors, it is important to maintain long-term relationships, since no investors will be likely to invest in a business they do not know well. Investors, who express an interest in the business can help it grow, find markets generate satisfying profit.
- Finally, nowadays, it is important to create a good public picture of the company and maintain a good relationship with he media.
A good way to start networking can be asking for advice/ opinion, people like to feel valuable and everyone likes to share their opinion. This is a great opportunity to start a conversation and this way, the person we are talking to is less likely to refuse to respond.
When meeting new people and trying to start some kind of mutually beneficial relationship, it is important to offer value to the other side. The person we are talking has to have a reason why continuing talking to us. When offering a win-win situation the success is much more likely.
As the network grows, it is important to maintain the numerous relationships. Dreamstake suggests dividing all contacts into homogeneous groups and always have at least one person, who is dedicated to maintain the relationship.
2. How to pitch a start-up to investors
Finding long-term investors and enough funds for the business is the key to make business competitive and profitable in a long term. Many websites call pitching an 'art' that takes a lot of time to master. Nowadays, it is easier for the audience to get distracted and the expectations are high. There are countless pitching guides available; books, articles, workshops,...
I liked the advice that Inc gives, because it is easy but seems very effective. Inc suggests to:
I liked the advice that Inc gives, because it is easy but seems very effective. Inc suggests to:
- get the audience involved (typically this can be done by a quick survey, for example a lot of TED talks start with a simple question: who of you has ever., raise your hand if you have ever...) simple questions like this get people interested in the topic, they start feeling like they are a part of something, like they are important. Those questions should show that the business solve some important problem the audience has. The question should be quick.
- The problem can be that this method is becoming increasingly popular and if we are at a pitching event and we are about to be the tenth person, who uses the same method in one day, it may not have the desired effect.
- careful with numbers. To support our ideas, we are likely to use research, surveys, questionnaire results, etc. Those naturally involve numbers. However, it is not the best idea to use exact numbers, percentages etc as they don't tend to be very engaging. If we are talking about topics such as energy consumption, most people cannot even relate to those number and it is just an empty phrase for them. Rather it is more effective to use comparisons, rounded numbers, etc.
- And finally, visual demonstration can also make a huge difference to an pitch. In this case it is important to use the visual demonstration effectively to support our main idea. A lot of colors, unrelated pictures do not have to have the desired effect. Colors should be chosen so that they match logo, product, industry,... all pictures and other visuals have to make sense, there has to be a reason, why they are here, what idea they support, how they help the whole picture.
For all of those tips it is important to always have plan B. If we are going to a pitching event, we have to make sure that we stand out from the others make the pitching engaging. The same is true for the case when we can see that our audience is not impressed.
A special type is an elevator pitch. This is a very short (15-30 seconds) explanation of what the company is about. The idea is that you can explain all you need in the same time you are in an elevator with somebody. Monster provides a whole guide, what information to include and how to present them when we get this chance.
Being able to give an elevator pitch is a very good skill, since we can never know, where we could meet potential investors. If such situation happens, if we are able to briefly explain the whole point of our business, this quick meeting can bring a lot of good results.
3. Important marketing tools and how to use them
Marketing of a startup differs from large, well established companies in many ways. While companies try to maintain the brand and increase the customer base, startups are starting to build their brand and in many things they are still flexible. Also, their customer base is just being created.
The strategy is rarely set in stone and a lot of things chance along the way. Startup has a major advantage in the speed of the process. All decisions can be done quickly, no vertical line of managers, through which every decision would have to go. Another difference is that strategic decisions within a large corporation have to be perfect, no mistakes allowed, while in startups, as there are many thing to focus on, often the decisions end with the phrase 'good enough'. Of course the budgets are different as well and in case of failure, while a company can fear bad public image and a decline in customers, for startups, the impacts of a failure do not necessarily need to be so big.
It can be very beneficial for a startup to use social media as a marketing tool. Most of them are free or with minimal costs, they can reach a lot of people around the whole world and they are also accessible. Without a good strategy, the social media can prove useless for the company. DOZ suggests some strategies a company should adapt:
It can be very beneficial for a startup to use social media as a marketing tool. Most of them are free or with minimal costs, they can reach a lot of people around the whole world and they are also accessible. Without a good strategy, the social media can prove useless for the company. DOZ suggests some strategies a company should adapt:
- A company can should use hashtags to reach a wide audience a define their brand. This can ensure a reach among various channels
- Always be active- and that does not mean online, but also engaging with customers, asking them questions, replying to comments, solving their problems
- Use engaging content -people, especially those who have been using social media for a long time tend to overlook ads with vague statements and graphics. If a company wants the ad to have an impact, it has to have a powerful and engaging content
- A recent trend has been using influencers to promote products arise awareness of the company.
Sources
Amigo. How Does Marketing Differ Between Startups and Enterprises. Available from: https://amigotechnology.com/marketing-startups-enterprises-diane-perlman/. Accessed: 3.5.2018.
DOZ. What Are the Best Social Media Strategies For Startups and Entrepreneurs. Available from: http://www.doz.com/social-media/marketing-resourcestitle-what-are-the-best-social-media-strategies-for-startups-and-entrepreneurs. Accessed: 3.5.2018.
Dreamstake Blog. Why networking is so important to #startups. Available from: http://www.dreamstake.net/blog/why-is-networking-so-important-to-startups/. Accessed: 3.5.2018.
Entrepreneur. Build the Network Necessary for Your Startup to Succeed. Available from: https://www.entrepreneur.com/article/284270. Accessed: 3.5.2018.
Forbes. Study: For 78% Of Startups, Networking Is Vital To Entrepreneurial Success. Available from: https://www.forbes.com/sites/federicoguerrini/2016/11/10/study-for-78-of-startups-networking-is-the-key-to-entrepreneurial-success/#3795ac834195. Accessed: 3.5.2018.
Inc. 3 Super Effective Ways to Start Your Business Pitch. Available from: https://www.inc.com/aj-agrawal/the-best-way-to-start-your-pitch.html. Accessed: 3.5.2018.
Monster. How to craft the perfect elevator pitch. Available from: https://www.monster.com/career-advice/article/how-to-do-an-elevator-pitch. Accessed: 3.5.2018.
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