Credibility is an essential ingredient of success for entrepreneurs trying to get a start-up off the ground. Potential funders and clients will obviously need to see the value of the business idea you want to bring to market – but at this early stage, they’re buying into you as an individual as much as anything else.
So, what is it about a person that makes others believe they can deliver? Is it passion, communication skills or a grasp of the numbers?
Communication, passion and honesty
Lynn Martin, who is Professor of Entrepreneurship and Innovation at Anglia Ruskin University, says: “Funders and investors need to believe that the person pitching to them can deliver what they’re promising. Funders of course want to believe they might get back their investment, perhaps with interest.
“First, all the research suggests that being able to communicate in person – with passion – is absolutely key to success. If you don’t have enthusiasm about your service or product, why should anyone else?”
Lynn, who led the Goldman Sachs 10,000 Small Business Northwest Programme 2010-2016 and has worked with hundreds of fledgling firms across the UK, adds that honesty is also a must-have trait. “Put over the cons of your idea, and how you plan to overcome them, as well as the pros. An experienced investor will quickly see through any bluffing. And you must always follow through on what you say you’re going to do.”
Making the business case
Substantive presentations, on paper or using digital tools, about your product’s value proposition and the business plan earn vital credibility points. “You should be able to present the business case with clarity and depth,” says Lynn.
“This is sometimes not an entrepreneur’s strong point. If you can’t put the numbers in yourself, take steps to get help. Or work on improving your pitch – a defining quality of an entrepreneur is the ability to work hard, and to learn from past mistakes too. It’s not about luck but hard work. As the golf legend Gary Player allegedly said: ‘The more I work and practise, the luckier I get.’
“However, to some extent, an investor might be more forgiving about your written presentations if you’ve impressed them with your enthusiasm and as a person. After all, they might be prepared to improve your business plan themselves if they think your idea has potential.”
One strategy, rather than a trait, that can win credibility is impression management, which includes making an effort to match your appearance to the kind of funder or client you’re appealing to. Lynn explains: “In creative and technology fields, people expect a more relaxed approach about what you wear etc, but that won’t work for every industry. But be careful, if investors recognise that you’re not being yourself it can make you look dishonest rather than confer credibility."
Know your stuff
Simon Williams, founder of self-storage firm Storage Giant, says: “Credibility comes with knowing your subject matter inside out. Once a funder or a client has cause to doubt you, you will have to work twice as hard to win them back.
“This does not mean that, as a start-up, you will always be faultless. You may be weaker on crunching the numbers, doing the market research or getting the business plan in order. But the more you pore over numbers the more you will come to grips with them. Eventually you should be in a position where, before you set foot in a meeting with a funder or investor, you should be intimately familiar with your cash flow numbers and the precise level of funding your business can ultimately support.
“Of course, you should be able to look anyone in the eye and explain your business with passion and enthusiasm. Crucially, it should be evident that you are adaptable and resilient, and able to evolve your business model in response to the realities of the business world as you actually find them.”
Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.