- Geekmaster
- 2020-05-01 10:56:19
- 10 minute(s)
Shark Tank is a popular TV series where promising startups pitch their ideas to successful entrepreneurs , known as The Sharks. The show provides a sneak peek into the venture capitalists’ minds and imparts valuable startup lessons.
Aspiring entrepreneurs get a once-in-a-lifetime opportunity to pitch their business to a panel of “sharks” — self-made millionaires and billionaires — and ask for funding in exchange for equity in their business.
Basically, it’s the dramatization of one of the most stressful, sweat-inducing, make-or-break moments in capitalism: the business pitch.
There is immense value in being the “fly on the wall” during these high-level conversations between billionaires and entrepreneurs.
ImportantIf you have something to do with entrepreneurship, the startup world, or are just thinking of becoming self-employed or climbing the career ladder in your field, this show is for you.
WarningYou won’t get an MBA equivalent education just from watching the show, but you’d be surprised by the amount of actionable business tips you can pick up just from tuning in each week.
Shark Tank can let you see what pitching really is, and by seeing what others do right and wrong, you yourself can understand the main principles of business and sales , without even having to make any mistake or be rejected for an idea.
For entrepreneurs, there is a lot one could learn from Shark Tank episodes, and some of them ring true.
So, let’s cut right to the chase! Here are five business lessons you can learn from Shark Tank!
Mood when no Sharks invest in a product you're rooting for 🤦🏻♂ #SharkTank pic.twitter.com/tVaRGUIPmf
— Shark Tank (@ABCSharkTank) April 27, 2020
Do The Math
Quoting an amount is one thing and having your numbers ready to talk about how you reached this number is totally different ball game. You need to know your numbers like the back of your hand.
You have to come up with a valuation for what you believe your company is worth. Then, your products and services have to back up that valuation.
WarningIf you come in with an overinflated figure, then the sharks are unable to negotiate a deal with you. This can happen in real-world business sale situations as well. If you think your company is worth more than you can demonstrate to potential buyers, then you won’t be successful in making a sale.
You need to know your numbers — sales, cash flow, debt, margin, and so on.
The sharks often hesitate to make a deal with entrepreneurs who don’t know important data points like their customer acquisition cost.
Eventually, you must know your financial breaking point.
What is the bare minimum that would allow you to launch the next phase of your business? What’s the maximum amount of profit you’re willing to relinquish? Investors aren’t meeting with you out of the kindness of their hearts ; they’re out to maximize the return they receive for funding you.
Those numbers have @robertherjavec like 😳 #SharkTank pic.twitter.com/S4cxuakvQ3
— Shark Tank (@ABCSharkTank) April 11, 2020
When you’re going to a meeting or pitch, practice enough that you can talk about your business even in stressful circumstances and please know your financials.
The most successful people are usually over prepared.
ImportantThese guys are called “sharks” for a reason. Show your fear and and they’ll smell blood . You can be sure they’ll eat you up alive if you don’t do your homework.
This is something Barbara Corcoran mentions in her excellent book, Shark Tales: How I turned $1,000 into a Billion Dollar Business.
Sell the Dream, not the Sales
The entrepreneurs that succeed in landing a deal usually have one thing in common: their business solves a real problem . Typically the problem the entrepreneur sets out to solve was one they experienced themselves.
You might not have a dime of sales but if you show that people are interested and that your product is special, you’ll get an offer.
ImportantMost products or services look at solving an issue. Sharks would be keen to put their money on a solution or a product which either solves an issue or creates a new market by itself.
Know the problems your business is solving and how to communicate that value to a buyer.
Needless to say, while evaluating this, they would also look at the size of the problem and what is the demand for a solution . Having a well thought out product would go a long way in securing an investment.
Sell the dream. Better not to have sales unless you are going to blow them away with your sales numbers.
When the sharks keep giving great business tips online 👏 #SharkTank pic.twitter.com/7inTJ3l7Fe
— Shark Tank (@ABCSharkTank) April 6, 2020
ImportantHere’s what the Sharks, or any investor, want to really understand: Do you have a great product? Do you know what the size of your market is? Do you have some sense of a business model? And, in some cases, do you have big breasts?
Stories influence people. If you can tell your company’s story in a unique way, you can get investors (and others) excited about your idea.
WarningIf your business isn’t solving a problem in your marketplace, then it’s not necessary for the economy. The only way unnecessary businesses survive is if consumers demand their products .
Be Crystal Clear
Be clear with your message. When someone comes onto Shark Tank with an idea for a new product, it’s important for them to communicate what their business is and how it is profitable. There’s no time to waste.
Ten seconds or less – that’s all you have to make a great first impression with investors.
WarningPeople who fail miserably in getting any money or the attention of the sharks are those who themselves don’t have the clarity or the conviction that their venture would be successful.
The first 10 seconds would pretty much decide if your case holds water or not.
ImportantOne should be able to articulate one’s business and exact numbers in or around 10 seconds . Sharks don’t’ have time to listen to stories, stories could follow after the high pitch, but the first 10 seconds determine a lot.
When an entrepreneur comes onto the show with too many different kinds of products or an unclear direction for the company, the sharks are unlikely to invest. This is true for buyers of businesses as well.
They want to see what you have to offer upfront and in the open.
Even if you don’t think you’ll ever find yourself standing in front of a bunch of venture capitalists, every entrepreneur needs to know how to effectively sell himself and his idea to his potential partners, employees, and clients/customers.
Hope you enjoyed #SharkTank, thanks for watching! pic.twitter.com/3dScT6W89k
— Shark Tank (@ABCSharkTank) May 2, 2020
ImportantYou should be prepared to give your 10-second elevator pitch to anybody . You never know when you’ll have a chance encounter with a potential customer or someone who can have a big impact on your business.
You have to learn how to communicate your vision. You have to practice in a mirror every morning.
So, how do you create a great elevator pitch? You can start by checking out the best Shark Tank pitches of all time.
Solve Real Problems
Not every product on Shark Tank is a patented concept with no direct competitors. But, if your product or company has some sort of advantage over its potential competitors, the sharks will still invest in the business.
This advantage could be anything from differences in the supply chain, altruistic principles, or even just a highly motivated leader.
ImportantInvestors want to see that you’ve taken a risk – investing your money and time — showing that you believe in your business. Don’t ask for their money if you haven’t invested yours .
You should build for a market you understand and are passionate about. The businesses that typically fail at securing funding don’t solve an actual problem.
Needless to say, while evaluating this, they would also look at the size of the problem and what is the demand for a solution . Having a well thought out product would go a long way in securing an investment.
Investors buy into people as much as ideas.
ImportantThe Sharks get most excited about a passionate, likeable entrepreneur . Be honest. If that’s not you, and you need investors, consider finding a partner who fills this role.
When making the deal is as simple as that 🤝#SharkTank @BarbaraCorcoran pic.twitter.com/GF42u1PaiE
— Shark Tank (@ABCSharkTank) May 2, 2020
WarningThere have been a lot of Shark Tank pitches around what the entrepreneurs thought were “good ideas” – perhaps thanks to the feedback of family and friends.
Great ideas are a dime a dozen. Ideas are merely starting points.
Unfortunately, that’s not always enough to convince a smart financier to hand over their money. To turn one into a profitable company, entrepreneurs need to conduct extensive marketing research and have an organizational strategy .
What’s important is that you not only test your idea, but start taking action to make it successful.
Listen More, Speak Less
Success or failure doesn’t matter as long as you learn from it this applies to Shark Tank as well. Sharks mostly give out valuable advice on the way forward , on what went wrong and what can be done, especially, when there is no offer.
The Shark Tank investors offer great advice when they turn people down.
ImportantIf you’re told “no” don’t be so displeased that you can’t listen to the rationale. And, if they don’t tell you why, ask so you can leverage that advice moving forward. This is a chance for insight from experts .
Listen and learn from what you missed out and perhaps you could have a better chance next time around.
If you don’t get the deal, learn what you did wrong , and either modify your product, your approach, or just start a new business.
Who wouldn’t feel wonderful after securing two deals in a row? 🦈🦈 #SharkTank @kevinoleary pic.twitter.com/oX0GKuHhFB
— Shark Tank (@ABCSharkTank) March 28, 2020
This is not the end of your life if you don’t get some crappy deal on Shark Tank.
WarningPlenty of successful businesses bootstrap their way to success without the assistance of investors. Bringing in an investor wouldn’t do much for these businesses except add another cook in the kitchen – and another hand in the pie.
Besides, some businesses just aren’t well suited for investment . Investors typically want businesses that they can scale and aggressively expand.
Taking venture capital ultimately means giving up control.
ImportantBefore seeking investment, ask yourself: Do we really need outside funding? Have we reached a point where we can’t continue to grow without it? Are we the type of business an investor would even want to invest in?
Final Thoughts
Reality shows like Shark Tank can prove to be of great use if one could relate to what was happening and how investors think. These learnings could go a long way in securing investments for your venture.
ImportantShark Tank not only provides great entertainment value – it also provides tons of unique business lessons . These lessons can be invaluable for entrepreneurs looking to get ahead.
Even when the rejections are excruciating, the business lessons offered up should not be ignored.
You have to have thick skin. Sometimes, luck’s on your side. But most times, the road’s filled with bumps and potholes. Every failed pitch that comes on the show leaves us with a valuable learning experience : that the only real failure is giving up.
FactsAn example is Jamie Siminoff. He pitched a wifi doorbell in 2013 and went home empty-handed. Five years later, Amazon acquired Siminoff’s company for $1 billion. He was so successful that they brought him back on Shark Tank, this time as a guest judge!
If you’re an aspiring entrepreneur, I hope you’ll take all this advice under consideration, or in the words of Mr. Wonderful, “You’re dead to me!”
Only in the business world can a guppy turn into a shark. What business lessons have you learned from Shark Tank? What was your best takeaway from Shark Tank? Share them with us in the comments!
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