Telling you to be honest sounds almost too obvious to say out loud. After more than 30 years in this game, I can tell you it is not obvious at all. Most people are not dishonest on purpose. They are just not honest, least of all with themselves.

Honesty is for you first

Being honest and real with your story carries as much weight for you as it does for any investor. For you, it is the only way to understand where your business actually is, to measure its performance, and to optimise it, so that you can respond to opportunities, create new ones, or deal with the situations that are not in your favour. The investor side of honesty counts too, but it starts with you.

I meet a lot of people who embellish when they tell their story. They reach for the blue-sky bullshit of where the business might be, could be, should be, or would be, instead of “this is how it is, this is what we are forecasting, this is why, and here is the concrete evidence behind it.”

When the story is not clear

Then there is the other failure: people who simply have not put their story together. A common example is someone starting a new business who wants to fold parts of an existing business into it. In principle it is a great idea. In practice, most people who set out to do that and then go and pitch for investment have not got their story straight. They have not thought through the questions anyone is going to ask.

Picture it. There is a brand-new business: no clients, no track record, just a shell and an idea. Alongside it sits an established business with the clients, the partners, and the vendors. The plan is to bring all of that across into the new entity. The reasons vary, and sometimes one of them is debt sitting in the old business that no investor would touch.

So they tell the story: we have this business, we have partners, clients, and vendors, we are in this many locations. It sounds like a real opportunity. Then it turns out the entity you would actually be investing in has none of that yet. In their head the two businesses are one and the same, because both are their baby, and they have never separated them or built the mechanism to move anything across.

A few simple questions expose it. Have you told your clients they are moving across? Are your partners willing to move into the new entity, and have you even asked them? Will your vendors supply the new entity on the strength of your old relationship? You ask yourself those questions and get your ducks in a row before you pitch anyone. But if your head is up your ass, if you have not separated the two entities in your own mind, you never go through that process, and the deck you build ends up full of garbled crap that muddies the water and confuses the story.

Become the person on the other side of the desk

Set the investor to one side. Even if raising money is not your aim, and you are using the pitch deck purely to measure and optimise the business, the lesson holds: without clarity you cannot present it well, and without clarity your business is, frankly, a mess. It does not have to stay that way.

So when I say be honest and tell the real story, I do not just mean to other people. I mean to yourself. People get attached to their businesses, and passion is a good thing, but it costs them perspective and it costs them clarity on where they really are.

Detach from the emotion from time to time and look at the business soberly, especially if you are planning one of these move plans. The easiest way I know is to imagine someone from another industry is bringing this business to you and asking what you think. Listen to your own story as if it were theirs, and you will pick up the cues quickly: the gaps, the leaps, the places where what you are saying is a clusterfuck. Go through the work of building a pitch deck and it will give you that clarity whether or not you ever pitch an investor. And if you do have one sitting in the drawer, kept up to date, you can pitch for investment at any time.