As an entrepreneur myself, and the fact that I coach dozens of entrepreneurs regularly… I LOVE the show Shark Tank! It is a Friday night staple in our house. The whole family watches and critiques from the couch each person’s pitch to the Sharks. We can all learn a lot about business just from watching the show. The sow had undoubtedly inspired countless people to take a chance on their dream. In honor of tonight’s episode when the Sharks reach $100 Million in investments… I thought I would share with you my observations of what any seasoned or budding entrepreneur can learn from the show and of course the Sharks themselves.
1. You’ve got to know your numbers!
So many times, for entrepreneurs on Shark Tank this is the nail in the coffin before they even get off the ground. Someone comes into the tank and… well… tanks! All because they didn’t come prepared. I work with many business owners and one thing I noticed… the successful ones know their numbers and the struggling ones don’t. It is critical to not only know your income, but know your expenses too. It is required by the IRS to keep business books and it is also a great idea to evaluate them often! You have to know your breakeven point before you can ever take a profit. The simplified formula is Income minus Expenses = Profit. But if you have run a business you know it isn’t as cut and dry as that! Knowing your numbers will make a huge difference in your growing business.
2. Numbers don’t lie!
Another thing that trips people up… they know their numbers but didn’t take care of them! What I mean by that is… they got themselves in debt or their margins are awful! Maybe they already have backers that own a part of their company so they are limited in how much equity they can offer the sharks. ALL of this leads to an increased chance of not getting a deal. As an entrepreneur, you must measure risk. Investing in education, product or marketing isn’t always a bad idea… but you need to weigh the ROI (return on investment). If you are spending $10K and getting a return of $2K, something has to change or you will be in a tough situation financially and FAST! The moral of this observation… Know your numbers and take care of them!
3. Passion doesn’t pay the bills!
It is necessary to be passionate about what you sell or do… but that is not enough. You need strategy, planning, marketing, number crunching, etc. etc. You need business skills. Not everyone who starts a business has business training. You must do your research and continue to educate yourself on the current state of the market, changes in technology, changes in trends… and I may be biased here… but hiring a coach can help a lot! One of the perks of Shark Tank is when you get a deal, you get a Shark! They know the “how to’s” the average entrepreneur doesn’t.
4. Just because you love it… doesn’t make it a business! I say this one with a “But” to it. It really depends on what your goal is… if your goal is to be a millionaire… you need to be sure what you are offering fills a need on a large scale. You may have heard the Sharks say, “You came in too early” or “This isn’t a business it’s a hobby” or “it’s not scalable”. What your ultimate goal is matters. If you are looking to help people and make a comfortable living for yourself and family that makes a difference. Your business doesn’t need to be “scalable” it just needs to be treated like a business (not a hobby). If you think your business is worth Millions… you need to be sure your product or service in needed by millions! It comes down to supply and demand… you’ve got to supply what people are demanding. Fill a need or solve a problem. The key here is to make money you must be intentional. A business needs to be set up and managed to generate income.
5. Know your Pitch!
When watching the pitches on Shark tank, you can tell who prepared! They practiced that initial pitch hundreds of times! Even if you aren’t going on Shark Tank, you need to be able to clearly and concisely explain what you do to a potential buyer/investor. Although many of us are not looking for capitol… you need to be able to tell people what you do… more importantly what’s in it for THEM! Practice your 30 second intro. Be a natural as you can and showcase what’s in it for Them.
6. Success doesn’t happen overnight!
We live in an “instant gratification” world! Impatience is a part of being a business owner. We work hard and want to see instant results. But success takes time… it is a dance of stepping forward, stepping back and sometimes falling. You just have to get up, dust yourself off, and try again. You only truly fail if you quit!
So, I hope you enjoy the show as much as I do… Share with me what YOU have learned from the show (or even from being an entrepreneur!) Congratulations to Shark Tank!