5 Outstanding Lessons Shark Tank Fans Can Apply to Boost Their Business
Since its 2009 premiere, Shark Tank has been one of the most popular reality series focusing on startup industry. The concept of the show is simple: aspiring entrepreneurs are asked to present their business or product and thus get a chance to receive funds from experienced investors, the so-called ‘sharks’.
Apart from the opportunity to get project funding, startups can also get valuable advice concerning business ventures from established investors in the industry. However, it is not only the entrepreneurs who benefit from the insightful suggestions: the audience can also walk away with lessons they can put to good use in their own business endeavors. In this article we will cover some of the most effective pieces of advice from the Shark Tank’s investors panel which you can apply in your line of business.
Lesson 1 – Have all the data ready before the pitch
Many entrepreneurs make the pitch before they have all the data at their disposal. They try to guesstimate, and hasty, unsubstantiated estimates, do not sit well with investors. Would you invest your money in a business that cannot provide you with a solid data-based investment analysis?
To avoid losing potential investors, you need to prepare the following data for the pitch. First of all, you need to allow the investor an insight into your company’s net value, investments made so far and current ROI. Next, you need to present clear projection numbers in order to convince the investors their funds will not go down the drain. Finally, you should never do a pitch before you know the profit margin, revenues, growth metrics, cost per acquisition and other relevant figures.
The takeaway: Gather all the data in advance, study it carefully, and be prepared to deliver it on demand.
Lesson 2 – Have a plan in place for company scaling
As your company starts to climb the success ladder, it is imperative that you have a plan in place for scaling in order to ensure sustainable growth. This part of the process is critical for both the entrepreneur and potential investors. First, go over the budget implementation strategy so far and see what can be adjusted for growth, and do not forget to take into account potential new investments that could fuel your scaling. The next step is to decide the direction you want to pursue: for example, you can hire more workers, get a bigger space, or increase output. A small business cannot do all of these at the same time, which why a long term plan is so critical for peak long-term results.
It is important to keep in mind that the scaling process does not cut into your profit margins alone: not only does the lack of carefully devised strategy make your business less viable in the long haul, it can also make it less appealing to potential investors.
The takeaway: Always have a plan in place. It will help you scale your business, plus it will allow you to account for future changes.
Lesson 3 – Find investors who are passionate about your business
As we have often seen on Shark Tank, there are two main types of businesses that the ‘sharks’ invest in. The first type is closely linked to the sharks’ area of expertise: for example, one of the biggest and toughest ‘sharks’ Kevin O’Leary usually focuses on businesses that he knows most about. The second type, however, has little to do with the sharks’ principal field of business: we have seen Mr. O’Leary invest in a tea business just because he is an avid tea drinker. Some other sharks have also invested in businesses outside their immediate area of expertise simply because they are passionate about the service or product that company is promoting.
The takeaway: Finding an investor who is as passionate about your business as you are can make a major difference and help you get that one boost your company needs, both in financial terms and with regard to constructive strategy-relevant contribution in ideas.
Lesson 4 – The importance of networks
Before you sign a deal with a new investor, you should take into consideration the networks they can bring to the table and see whether they are a fit for your products. For example, if you want your product to appear on QVC, American cable, satellite and broadcast television network specializing in home shopping, you will want to enlist Lori Greiner as your ‘shark’, because she is able to help you get there. On the other hand, if you want to see your product in Best Buy, Daymond John should be your “shark” of choice.
The takeaway: Be smart when choosing your investors. It is not just their money that matters, it is all the connections that they can provide. A good investor will not just show you their cash: they will also help open important doors for your company to rush it onto a new level of success.
Lesson 5 – Learn to create value in people’s mind
In order to attract both investors and customers, you need to know the answers to the following two questions: Why should someone invest in my business? and Why will people want to buy my product?
These two simple questions define the value of your company and its ability to obtain both funding and profits. It is quite easy to be biased and think that your offering is great: it is the infallible argumentation to back your business up that counts. Many Shark Tank participants did not know the answers to the two questions listed above, and it cost them the opportunity to get the investments they needed.
The takeaway: a good business owner is able to review their business from the standpoint of both the investor and the customer, and he knows how to present their company’s value to both groups.
Shark Tank has granted the general public an insight into the segments of an investor’s decision-making process. What makes this show so educational is that it allows the audience to see where business or startup owners went wrong when presenting or pitching their company. Additionally, the viewers get a chance to learn which are the most important aspects the “sharks” pay attention to or demand insight in from the entrepreneurs before closing a deal.
Go ahead: use these free insights into an investor’s mental process to boost your business and attract a ‘shark’ of your own. You’re welcome.
