One of the more challenging aspects of being an entrepreneur is facing “live” questions about your new venture. In these situations, it isn’t the content or knowledge that is the most difficult aspect of this process. Rather, it’s understanding the context of the question being asked and then showing how you arrived at your answer. This is a lot to ask of anyone, but the key is to not get flustered. Easier said than done. But here are a few tips on facing those tough questions and how to answer them like a pro.
1.) The answer to any question is – “it depends.” All answers need to be put in the proper context. Even the simplest question needs to be framed in the context of those factors that could cause the answer to change or be untrue. For example, “When do you expect to begin sales?” Is the question really, the first sale or steady sales? The process of beginning sales takes many twists and turns. Provide proper context, such as: “We are aiming to close the first sale in May, but our sales efforts won’t be up to full speed until September 1.”
2.) Never argue with an investor. Investors have many personalities, so sometimes a question can seem to dig in a bit under the skin of an entrepreneur. Remember, if someone doesn’t understand you, it is your responsibility as the communicator to make sure you are understood. Always take the stance that a smile and a sense of detachment will help you stay on track.
3.) Resist the quick short answer. Show your decision logic and score big points. For example, “What was your revenue projection for year 3?” Don’t just answer it, show your logic trail, as in: “You’ll remember that in year 1, we will still be pre-revenue and will incur a $150,000 loss, and that in year 2 we aim to break even if our revenue achieves $350,000 with just one full time sales person. But in year 3 with our sales force at 3 full-time sales people we project a revenue target of $750,000 selling in 5 states.”
4.) All questions relate to financial outcomes or consequences. Even the question, “What color will your logo be?” is an investor sizing up what decisions you will make during your business development. Investors usually ask questions directly from their area of expertise, so they will know what things cost or will produce. Remember if the answer is “blue” then explain how you decided on blue and what you spent arriving at that decision. For extra impact as a leader, also project what positive business impact blue would have over any other color.
5.) Understand what the real question is. There are hundreds of examples for each of my points above. But each also has another layer behind the direct question you need to be possibly alert to. For example, if you answer that your first sale isn’t until May, the real question could have been, “Do you have enough cash to get to your first sale?” Always recognize that these questions are meant to understand the underlying logic of your new venture. Focus on how your decisions affect the development and growth of your new venture and the investors will see you not only as an entrepreneur but also as the competent leader of your new venture.
-Stamp
