How to Answer Tough Questions from Investors
If you are lucky enough to get your business idea in front of a group of investors, then prepare for a tough line of questioning. Most young entrepreneurs are unprepared to answer most questions from investors. That’s not because of a lack of knowledge, but rather a lack of preparation. You should anticipate grueling questions from people who are planning to give you their money. Once you do, here are several tactics for providing the right answers:
Don’t appear anything but confident when it comes to answering investor questions. If you are skittish when you answer, then the investors might assume that you are being misleading or don’t know what you are talking about. Therefore, the first thing is to be confident in your ability to deliver. Don’t just appear confident, embody it. The investors will be looking for entrepreneurs with great leadership and management skills to see a business idea blossom into a successful company. Confidence is one of the foremost traits of a good business leader.
Don’t Lie, Ever
Sometimes investors may ask truly unexpected questions that leave you speechless. If this ever happens, don’t lie. Don’t make up statistics or resort to unverified hyperbole just to answer a question confidently. It’s very likely that the investors will catch you in a lie like that. If they do, you will lose all opportunities to gain funding. If you genuinely don’t know the answer to a question, say so. However, also add that you will get back to them with the answer. When the meeting is over, research the right answer and do get back to the investors. This is the responsible thing to do.
Be the Teacher, Not the Student
Expert business consultants like those at gr-us.com advice entrepreneurs to approach investors like a teacher, not a student facing an examination. Your investors are there to learn about what you are going to do, not to interrogate you. Also, keep in mind that if they show up, they are already interested. Entrepreneurs should approach the line of questioning as a teacher would, and see each question as an opportunity to educate the asker. Use each question to familiarize the potential investors with your idea and to reframe your sales pitch. Don’t approach it like an exam questionnaire that you have to answer in the right way.
Make Sure You are Answering the Right Question!
It can be overwhelming to stand in front of investors and deliver a speech. But when you do so, focus. Make sure you are answering the right question. Listen carefully to what the questioner is asking and provide an answer that directly relates to that. Never steer off the topic. Be on point and specific.
Above all, don’t answer tit for tat. As mentioned above, don’t treat the questions like an interrogation. Don’t be on the defensive and provide rapid-fire answers as if you are playing a Wimbledon tennis match. Educate with your answers and get the investors on your side. That’s the right approach to secure the funding you need.
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