Need to convince investors that your health, wellness or fitness business is a good bet? Ten building blocks for your pitch:
1) Build a strong introduction
Develop an incredibly short and instantly intriguing introduction that gives a quick peek at your Big Idea and why you and your business are worthy of a closer look. By “intriguing,” I mean hitting the points that would interest an investor. I don’t mean the usual fluffy “elevator speech” that typical networking groups emphasize.
“Our clients “graduate” to us for extended fitness and strength programs following physical therapy or inpatient rehab. In the seven years since the business started, we’ve grown the business to eleven cities in the Northeast region. We’ve got six-month waiting lists and we’re ready to expand their footprint.”
2) Know the problem you solve
Explain why you’re in the business you’re in, and how it uniquely benefits your customers. Don’t make the mistake of hopping up on your soapbox about the national obesity epidemic or throwing lots of national statistics in here – they’re not relevant.
“Moms are worried about raising great, healthy kids. They’ve got everyone from Gwyneth Paltrow to Dr. Oz to their local school system telling them they’re doing it all wrong. We make it easy for them by…”
“Employee wellness programs usually require computer access, but lots of workers don’t have computer access on the job. We provide hardened, weather-resistant computer kiosks for places like warehouses and factory floors that include the privacy software to keep everything HIPAA-compliant.”
3) Articulate your solution
Explain how you solve the problem and how you do it better than others.
“What’s different is that all of our basic yoga classes are free AND limited in class size, and they have a specific purpose: comfortable, safe informal time to build community, dispel myths about yoga and spark ideas about how to make the most of your body and its abilities. Within 3 to 5 sessions, 70% of our free students sign up for more in-depth classes and workshops.”
4) Explain your market
Describe the size of the opportunity – how many people fit your target audience in your geographical area. Include any distinctive characteristics.
“Our target customers are mature adults determined to stay on top of their health and wellbeing. Nashville is an increasingly popular retirement community. Estimates from the last census indicated that we’ll have XX individuals living here between the ages of 55 and 70 between now and 2020. On average, over half of these individuals have three or more chronic health conditions. That means that there are XX people here who fit our target audience.”
5) Tell them your business model – how you make money
Explain to the investor your major revenue sources (not all possible revenue sources regardless of size) and revenue model – direct or indirect, one-time purchase vs. subscription, etc.
“We sell health club memberships exclusively through affiliates and independent commission-only sales reps. Our membership structure is based on 3-, 6- and 12-month membership rates with a profit margin of X%, X% and X% respectively. That accounts for 60% of our profits. One-time workshops, classes and seminars sold primarily via email marketing campaigns to both members and non-members account for the other 40%. We intentionally target that mix because we want to maintain a diverse revenue stream.”
“We use flat-rate tiered pricing to encourage employers to maximize enrollment. That way, the per-person average is lower as enrollment increases. For 1 to 1,000, the cost is X. For 1,001 to 4,999, the cost is Y. For 5,000 to 7,499…”
6) Identify your “unfair advantage”
Highlight any proprietary technology or hard-to-match expertise or an unusually strong and defensible market position.
“We’re a rarity in the physical therapy world because we combine one-on-one physical therapy and traditional home exercise prescriptions with walking programs and social events that provide practical help in getting moving again plus social support and encouragement. That means much more successful outcomes for our patients.”
“We’re the only clinic in the Tri-State area that offers one-stop assessment and treatment for kids with attention disorders ranging from autism to ADD. Moreover, all of our clinical staff are board-certified and every single specialist actively participates in our community outreach programs. Our credibility and visibility in this region is literally unparalleled.”
7) Acknowledge the competition
Explain who or what it is. Do NOT say there is no competition–that just shows potential investors that you don’t understand your external environment very well. Then explain how yours is better or different vs your competitors.
“Lots of fitness businesses go after sedentary people. We’re different because we’re all about getting people moving with games. No aerobics classes, no treadmills, no barbells. Everything here is fun and games, all the time. It’s like a playground for families.”
8) Describe your marketing plan
Be specific. It’s not enough to say that you rely on word of mouth and your website. That usually means you don’t actually have a plan. It’s in the hands of the gods!
- Sales and distribution plan – how will you get customers?
- What channels will you rely on? Major account business development, direct marketing, resellers, email…?
- What are your key sales metrics? Lead volume, close rate, selling costs
“We post new nutrition content weekly on our website to keep it one the first page of search results in our market. We promote healthy cooking specials through email coupons and Twitter and generally have a 30% take rate for the email promotions and a 70% take rate on our Twitter promotions. Our quarterly grocery store tours and open houses usually results in 10 – 20 new clients within 30 days. We also adopted a local school and that generates free publicity for our business since the local paper usually writes about our programs there twice a year.”
“We’ve built our own lead list of employers with corporate wellness programs by combining purchased lists and our own research. We direct-mail to that list four times/year with a call to action designed to result in email address acquisition. We then send a monthly email newsletter and execute our ongoing content marketing campaign to that list. Our click-through is 45% on our newsletter articles and 65% on our content marketing promotions. Of the content marketing click-throughs, 35% who download white papers become paying customers within 120 days and 65% who attend a webinar become paying customers within 90 days.”
9) Tell them about your team
Potential investors want to know who you already have on board. This includes your partners and/or employers as well as your corporate or advisory board.
Outside investors are most interested in:
- people with uniquely distinctive and relevant expertise that give you an “unfair advantage”
- entrepreneurs who have built and sold companies and have a track record of delivering/beating promises to investors
- sales and marketing whizzes who know which sales and marketing tools you need, can develop them, and know how to use them to sell your stuff
- prominent individuals actively engaged in growing the business by leveraging their connections and public profile
“This is the third company I’ve grown from scratch with outside investors. We sold the first two within five years at a multiple that exceeded my investment group’s original business case by 400%.”
“Our chief medical advisor is Dr. Maria Smith from IvyLeague Medical School. She leads the top fibromyalgia research lab in this field, located at GreatUniversity, and is the top NIH grant recipient for five years running in this area. She’s also the four-time president of the Global Fibromyalgia Foundation and typically makes over 100 media appearances every year.”
10) Money and milestones
Tell prospective investors
- how much money you’re seeking
- how you would spend it
- what financing you’ve previously obtained and how you spent it
Develop three scenarios, for small, medium, and large investments. That creates flexibility for investors, since some will have more funds available than others.
Divide your anticipated spending into three buckets:
- the funds needed to build or expand your product, program or service
- the funds needed to market your product or service and get customers
- the funds needed to hire day-to-day people and implement needed infrastructure
“I’m seeking an investment of $XXX to build out a third studio so we can expand into the growing Collierville/Westhaven region. Our real estate and construction estimates are in Appendix A.”
“We’re seeking an investment of $XXX to establish a sales force and fund marketing programs to target a new vertical for our Evergreen Neighborhoods service, families looking for alternatives to large assisted living facilities for family members with special needs. Here’s an outline of the specific sales staffing levels, lead generation targets and close rates we expect, and our marketing timeline and budget is outlined here.”
Latest posts by Leslie Nolen - Radial (see all)
- Try This: Prescription Trails - March 27, 2015
- Hiring Key Advisors: How To Reference-Check Attorneys, Consultants, Accountants & Other Professionals - March 16, 2015
- 2014 Report: Healthcare Costs Double Over Ten Year Period - March 8, 2015