In the past, there have been a lot of people sharing the four Ps for raising capital. However, successful entrepreneur and author Reed Goossens added two more items to the list to make it more comprehensive. Putting all the Ps into practice together is a good way to yield better outcomes. These are the most important points to understand about each of the six Ps of raising capital like a pro.
Being professional in raising capital is not just about your work experience. If you don’t have a long history of working in real estate, it doesn’t mean that it’s a bad idea to get involved. Reed noted that people who think their lack of experience disqualifies them should eliminate that “I can’t” mindset and lean instead on past experiences, like other jobs in other industries.
The lessons you learned in your previous roles can often be applied in new ventures. For instance, if you used to work in retail sales, you can apply useful sales techniques to marketing or even building pitches for investors. You can find important elements of professionalism in skills and communication techniques that you probably learned in past roles. Dressing professionally, arriving on time, being prepared, and communicating in an articulate manner are some examples of simple and key elements of professionalism. Being confident and having the right mindset are also important in being professional.
With pitching, the top goal is being effective. According to Reed, there are three levels of pitching: social, scheduled, and sales.
A social pitch involves social interaction and delivering the pitch to make it a memorable start or part of a conversation. In the social element of the pitch, Reed talked about how he included parts he called name, same, claim to fame, and goal of the game. In a social situation, he introduces himself and tells people about how he quit his job in another country to come to the United States and what his goals are as a real estate investor. His dialog is quick and engaging, making an effective social pitch.
Next, your scheduled pitch ties into the social part. After getting someone’s interest, your scheduled pitch involves setting a time to meet. It can be meeting for coffee, dinner, a drink, or talking on the phone.
The sales pitch is the final one where you may answer questions, deal with objections, and offer explanations. Reed also said that people want to hear emotion-invoking pitches, such as Dr. King’s “I Have a Dream” speech. Being able to stir emotions that encourage actions is important.
Today, when people want to find information about someone, they have a wealth of details about most people at their fingertips. This P considers all that and emphasizes the importance of having a professional and useful profile.
Professional headshots, logos, blog posts on important and related topics, websites, and social profiles are important. People want to see that your professionalism and pitch match what they find online. They should be able to find answers to what they may be looking for in learning about you. As Reed said, a website today is often like your business plan, so making a coherent and useful online profile is essential.
This P covers how you articulate a message. Consistency is the key for any chosen platform. Reed recommends that you find what you are good at. For instance, if you are good at writing, a blog may be your ideal platform. If you are good at making videos about commercial real estate, YouTube may be a better choice. Going back to consistency, this will require regular intervals of communication. For example, a weekly blog post or YouTube video about multifamily dwelling topics is consistent if you are pitching to an investor for that, but posting blogs or videos sporadically will make you appear inconsistent.
Practice your pitch in a circle of friends before pitching it to an investor. Create a business overview of the pitch. The goal is to present the information in a way that is informative, useful, and compelling.
Think of a brochure that is designed to inform and encourage the reader to take action. Outline a mission, values, and vision. Also, be sure to include key elements of your strategies, how the investment will benefit the investor, and any supporting information, such as a relevant case study. Reed recommends practicing your pitch a lot before you actually present it to an investor.
Being patient can feel like pushing a boulder up a hill. One of the key messages Reed conveyed with patience is that you should focus on your own race. Today, it is easy to look at competitors and try to do what they do. Building a unique brand and being consistent are both important, and it can be distracting to pay too much attention to others and try to mimic them. Keep sight of your goals, and keep working toward them when it feels like they are unreachable.
Those are six of the most important steps for raising capital, whether you are focusing on multifamily dwellings, larger commercial real estate properties, or something else. Although the journey may not feel easy, the hard work of combining these six steps will help you stay on the right path to success.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.