Unless you live under a rock, you know the Shark Tank. The wildly popular television show started airing on ABC in 2009 and has millions of fans. I love watching to see what crazy ideas people will pitch, then trying to guess if a shark will invest and which one.
I also find myself guessing what questions the sharks will ask. Of course, if you have watched more than a couple of episodes, you know that some questions are asked of virtually every entrepreneur. Why? Because these are the things that should be important to every business owner. So, let’s look at what you can learn from every episode of Shark Tank:
Know your numbers
Nothing turns off the sharks like a business owner that does not know their numbers, cold! What numbers are we talking about? Sales, Margins, Profit, Business Valuation (among others). A business owner that does have command of these figures shows they are not in tune with the financial health of their company. Nothing will turn off a lender, buyer, or shark, faster.
Know your customer
Who are you selling your product and services to? Why? What need are your fulfilling? If there is no reasonable market for your product, it will be very tough to generate sales and therefore generate an investment. Understanding your customer, how many exist, and how they make buying decisions is essential to marketing your product to its maximum potential.
How will the investor get repaid?
You hear the sharks say this all the time, “how will I get my money back?” When you are looking for an equity investor like a shark, they are not a long-term solution. They want a quick return and get out. However, a longer-term solution, like a lender, will also want to know how they are going to be repaid. Without a plan for how excess cash flow can be used to repay that debt, the lender is not likely to approve the loan.
Be likable
I saved this one for last, because it should be the easiest. I have observed that the people who smile, make the sharks laugh, and are just plain likable are more likely to receive an offer for investment. There have been plenty of pitches on Shark Tank by arrogant inventors who think their mousetrap is the answer to all the world’s problems. Even if they have all the other characteristics of a successful investment, even the sharks will not invest with someone unpleasant. The old adage is still true…People do business with people they like.
So that’s it, I think these are very applicable to most any business (of any size). If you do not know your numbers, don’t understand your customer, have no viable plan, and act like a jerk, the winds of the business world are against you. Why make it harder than it needs to be?
I would love to hear your comments.