Editor’s note: “The Angel Connection” is a regular feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share advice for entrepreneurs seeking angel investors and/or venture capital investment. He is chairman of the Triangle Accredited Capital Forum, an angel investor network with over 100 members throughout the Southeast.
RESEARCH TRIANGLE PARK – Once you have convinced your investors that you have created a winning product or service, you need to then explain the compelling reasons why the buyer will buy.
In other words, you need to show how you will actually win by communicating the extraordinary value you bring to buyer and make them aware that it is available to them.
Know Your Value – Make an Offer They Cannot Refuse
The most important part of matching your customer’s needs is being able to easily and decisively communicate the value (benefit) that you bring them. The customer benefit has to be financially justifiable and be so compelling that it will come to the top of their priority list for purchase. An attractive return on investment (ROI) is necessary, but not sufficient. The rate of return is equally important. Customers today need a big payback, but they also want it as close to now as possible.
Explaining a return in eighteen months will not be accepted. One that pays back in six to nine months or less will. With the budget constraints that exist today, it is imperative to be able to show that the expense will be recovered very quickly.
Therefore, be able to concisely explain your product’s or service’s value, in financial terms, and in a way that is so attractive that they cannot turn you down.
Be the Best
Needless to say, your product or service has to be a “must have,” from your customer’s point of view. “Nice to haves” are not affordable today. In addition, it has to be the best in a meaningful way. Meaningful to the customer, that is. You will need to show that you have a competitive advantage.
Your product or service has to be superior in many important ways, and you must demonstrate it by comparison to your competitors. But there’s more. If there is unique innovation in the product or service, your “secret sauce,” bring that out as part of your marketing message. For sake of protection, patent it. In addition, make sure the barriers to entry are large, so that you have a time to market advantage as well. But, being the best can also mean superior marketing and sales support, high product quality, more effective distribution, outstanding professional expertise or superior support.
Whatever being the best means make sure that your potential customers know that you are the best. Be able to say, “we are the best because …”
Reach High into Your Buyer’s Priority List
Your buyers have many demands for their budget dollars. You could have created a product or service that really does solve an important problem, but it could turn out that it is not important enough to spend money on right now. Keep in mind that you are competing for those budget dollars and you are not only up against your competitors, but you are also up against the long list of priorities your buyer has for those budget dollars.
In order to successfully communicate that you have a winner, your value proposition has to be better than most everything that your buyers are considering within their entire priority lists.
About the author: Bill Warner is the Managing Partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the Chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.