How to Create A Business Pitchbook for Presenting Real Value – Post #25

It’s finally time to get this business sold. Using our football analogy from previous episodes, you’ve got to get through the buyer’s defensive line to reach the goal. So what offense do you run? Show them your business pitchbook. Seeing how strong, and well thought out your business is will help you break through those low ball offers.

---

Podcast Time Index for “The Offer – Building the Pitchbook”

• 00:32 – The Offer: Get out the Pitchbook
• 01:25 – Time to get the Business sold
• 03:50 – What is a Pitchbook?
• 04:28 – What makes up the Pitchbook?
• 09:21 – How to compile your Pitchbook
• 10:41 – Using the right Language
• 11:37 – Be careful of what you say
• 18:39 – Be careful of what you do
• 19:24 – In Conclusion

---

What is a Business Pitchbook?

This collection of written documents and printed reports provides potential buyers with the relevant details of your company. That’s all it is. If it’s well-written and well-constructed, your pitch book will have buyers salivating at the opportunity of making you an offer. They will want your business.

5 Sections Every Business Pitchbook Needs

Since every company is different, your professional exit team will offer advice for what you need in your industry-specific pitch book. Most business pitch books, though, will include five major categories.

1. The history of your company
2. Your existing team players
3. Your business model
4. The company’s current financial situation
5. Your financial forecast

Building this information is hard work. At times, your work will feel tedious and futile. But if you take the time to do it right, the pitch book’s existence could bring you offers from multiple buyers and a desired, fair price for your company.

Why Business Owners Should Keep a Running Pro Forma

For me, writing my pitch book is an ongoing process. I want my entire company outlined in such a way that IF the time comes or WHEN the time comes, I don’t have to create the book from the start. I want my pitch book ready at all times.

But why would I go through the exercise of recording my company’s history if I’m still making history? Why would I go through the exercise of building a pro forma, or a business’s financial forecast, if I’m not planning on selling my business any time soon?

Well, the pro forma helps business owners communicate where they want to take their company. It also provides a nice trail guide of where they’ve been and what’s worked over the past few years. By downloading Profit and Loss Statement categories into a pro forma at the end of each year, business owners can evaluate historic income growth. They can clearly see how much the company’s income has grown over the past four or five years.

---

RELATED RESOURCES: Haven’t yet built your pro forma? Click here for our How-To.

---

Once entrepreneurs see their actual growth rate over the years, they can make realistic predictions about their future financial growth. If the company’s revenue has grown at a 10% annual rate, then they cannot realistically project a 30% yearly growth rate in their pitch book unless they make drastic changes. However, if the pro forma shows business owners have maintained a historic growth rate of 10%, and they’re now projecting a 9% future growth rate, that should be easy to obtain. Potential buyers can easily “buy into” that calculation.

Compiling Your Business Pitchbook

If you’re starting your company or working in its growth phase, now’s the time to start writing in your business’s ongoing pitch book. But if you’re getting ready to sell your business now, how do you accomplish this monumental project? Where do you start? Here are a few ideas to help you get started on your pitch book. You’ll need to modify them to fit your individual needs.

• Designate a team member to compile and edit all the necessary information.
• Write down or record your own memories of your company’s history, including highlights and low times.
• Ask your team players to write autobiographies.
• Have your management team outline your business model.
• Ask your accountant or accounting team to create, update, or print your pro forma.

As you create your book, don’t get so caught up in every word, there will be many changes. Your exit team will make changes and modify your text. Your advisors will craft in the keywords that will catch a buyer’s eye. They know how to do it, so trust them.

What NOT to Include in Your Pitchbook

When you build the pitch book, you obviously want to present your company in the best light possible. You want to show historical growth. Ideally, you’ll show-off your all-star team members. You’ll also outline an “enviable business model” and illustrate your company’s current “stable” financials. However, do NOT make preventable mistakes. Two decisions you make could cost you the entire sale of your business. So what two actions should you avoid?

1. Don’t inflate your financial forecast. – If you make your forecast overly optimistic, buyers could delay the sales process to make sure your company reaches its projected success. If it fails to meet predictions, buyers could significantly lower their offers or walk away from the sale altogether. So friends, be conservatively realistic.
2. Don’t give away your company’s success. – Some potential buyers would love to get their hands on your pitch book to learn your company secrets. If you provide them with your company data without asking them to sign non-disclosure or non-compete agreements, you could lose your business sale and possibly your actual business to a competitor. So, rely on your legal team to protect your investment from nefarious individuals.

A good business pitch book can be judged only after you have received the desired, fair price offer for your business. So have you started compiling the information for your pitch book yet? If you haven’t, why don’t you start? Even if you don’t plan to sell your business anytime soon, start this process. Or you’re sitting across the table with a buyer in the sales presentation, your pitch book is there to help out.

Remember, our goal is to make our lives, at least, financially simple. This can help.