10 Lessons I Learned From Shark Tank
There are very few shows that can teach you more about business than Shark Tank. The show may have premiered in 2009, but it is more popular than ever over a decade later. The show features “sharks”, or investors, that decide whether to invest in entrepreneurs based on their presentations.
The actual show is edited for time, but it still paints a pretty realistic picture about what investors are looking for when it comes to various companies. Here are ten lessons that I was able to learn from Shark Tank.
1. Be Passionate
The investors on the show are all very secure financially, but the same cannot be said for every entrepreneur that appears on the show. Some of them might be in a dire situation, and hoping that the show can change that. However, how is an investor supposed to be interested in your companies or ideas if you aren’t even passionate? Every entrepreneur should be passionate about their company and the problems that it can solve.
2. Have The Right Attitude
There are many entrepreneurs that appear on the show, but not all of them know how to interact with investors. Some entrepreneurs think that they know more about business than the sharks, which usually doesn’t end well. If you are sarcastic, or have the wrong attitude, there’s a good chance that you won’t get a deal. You must maintain a positive and open mind if you want to be an entrepreneur. Business is already tough – why would
3. Score Patents
Intellectual property is extremely valuable. Some of the most powerful companies in the world have become powerful through their patents, and if entrepreneurs can secure patents, it gives them an immense amount of leverage. Investors might strategize about what other ventures can be made because of the patent(s), which can lead to new revenue streams. If an investor knows that you have patents, their attitude might change about your entire company.
4. Don’t Fight Over Crumbs
On Shark Tank, the investors are there to invest. The entrepreneurs are there to make a deal. However, since the show’s inception, there have been dozens of entrepreneurs that have turned down because they fought over a couple percentage points of equity. Many investors feel that if you are willing to fight over the small issues, you might be tough to deal with in the future. You should learn to compromise (at least a little), as it can help you focus on what matters.
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5. The Right Partner Does A Lot
The “sharks” on Shark Tank have some incredible connections, and they can change your life. You might be thinking about your company, and the investor might even be thinking larger. For example, there have been situations where a partner has been able to actually get the company purchased by a larger company, which led to more money than the entrepreneur was thinking about. This is important to remember in business – the right partner can take you places that you didn’t expect or imagine.
There are also other options. Your partner might find a way to license your products, which can quickly turn into generational wealth that might benefit your children, grandchildren, and so on. You should recognize the power of an investor of this magnitude, and the kind of moves that they can make.
6. Strike The Right Tone
Entrepreneurs may know their business inside and out, which makes them feel as though they are an authority. However, this can sometimes be a bit offensive to investors, who were often in the same position. If you believe that you know too much, an investor might wonder what you need their help for. Be careful about your tone, or it might end up costing you a deal.
7. Cash Is King
Investors want to know that your company is profitable, and that means that you have cash in the bank. They don’t want to hear about how you spent all your profit on the wrong marketing strategy, or how you are “waiting to hear” from certain clients and/or prospects. If you can prove that your company is profitable, it shows investors that you are already doing fine on your own. As a result, an investor is more likely to want to partner with you. If you can’t even maintain cash flow – they will view your company as more of a risk, and may decline as a result.
8. Learn To Negotiate
There is nothing wrong with negotiation, when done correctly. Of course, this doesn’t mean insisting on an investor only getting 29% instead of 30% of your company – but there’s nothing wrong with a counter-offer presented in the right way. You should gauge the temperature in the room, and try to make fair and reasonable counter-offers. The sharks might even be impressed at your negotiation skills and end up becoming more interested than ever!
9. Be Realistic
There are plenty of people that believe that they will create a million dollar company or billion dollar company, but can’t offer any actual details about how to get there. Of course, if you are a growing company, it might be easier to understand where you are headed next. You should make sure that your projections aren’t insanely unrealistic, as investors might not take you seriously.
10. Highlight A Story
There are many entrepreneurs that become successful due to the fact that they have a unique story. The story about how the company was created might be a fun way to connect with consumers, or explain how a product was created. Of course, a military background or family background can help to frame the right story for consumers to be drawn towards a certain company. Learn how to highlight your story the right way, and it might mean concrete money for you and your company.
It isn’t easy to pitch to “shark” investors, and it certainly requires passion and poise. You have to make sure that you know your terminology, and won’t buckle under pressure. The show itself can teach you plenty about business, as well, and it might not be a bad idea to watch a season every now and then.