Lessons From Shark Tank On How To Be Successful will be described in this post. If you had an entrepreneurial itch and you were into American TV shows, you must have watched Shark Tank and been at least intrigued, if not fascinated by it. But if you are not so familiar with this show, no worries. Here’s a bit about it:
Shark Tank, a reality TV show that started in 2009 in the U.S., taps into the interesting dynamics of investments and business potential.
The show’s premise is basically entrepreneurs pitching their business in front of a panel of investors called “Sharks” to seek funds in exchange for some stake.
The panel of investors boasts some well-known entrepreneurs and public figures such as Mark Cuban, Kevin O’Leary, and Ashton Kutcher. The show is popular all over the world with many international versions such as in Australia, Mexico, Vietnam, and Nepal.
Along with providing a platform to secure investments, it gives business ideas huge exposure at an international level. As thrilling as it may sound, Shark Tank is not a cakewalk, neither for entrepreneurs nor for investors.
While entrepreneurs need to convince the panel of their business’ potential, investors need to make sure their investment will give them maximum returns. Hence, they ask important and often brutal questions to explore your business potential.
And this is the part where, as an entrepreneur, you can drive the most value from, even if you never get a chance to appear on this show.
Shark Tank can teach you a lot about what goes into an investment pitch, what investors look for, and what makes them invest in a business.
Before you start bingeing on Shark Tank or whatever, here are a few lessons I have compiled for you to prepare for the day you find yourself pitching in front of an investor.
Top 17 Lessons From Shark Tank On How To Be Successful
Top 17 Lessons From Shark Tank On How To Be Successful are explained here.
Lesson 1: Know Your Business Inside Out
You are the business owner. It’s likely your own brainchild. Isn’t it obvious that you would know everything about it?
As a no-brainer, as it is, it is not always the case. Intense focus on the big picture can sometimes make us overlook small details.
Being an entrepreneur, you have to be ready to tackle any challenge that comes in the way. And for that, you need to know everything about your business.
Suppose you have built a novel healthcare product and it is yet to hit the market. An investor would want to know whether it meets all the regulatory guidelines.
No matter how useful or innovative the product is, an investor wouldn’t want to risk their money on something that may have legal implications in the future.
Having clarity of your business in terms of your vision and mission and conforming to legal aspects related to your product or business as a whole is essential.
Additionally, you should be aware of all the functional aspects of your business, your assets, costs incurred, the business plan, and the resources you need for expansion.
You can’t afford to be unable to answer a question related to your business.
Lesson 2: The Story Behind Your Numbers Is Crucial
It would be an understatement to say business is a number game. The numerical values dictate and forecast the health of a business. And investors are looking to encash in on your numbers, of course, only if they look profitable. Also check Books For Entrepreneurs
Firstly, getting the math right for your valuations is crucial to helping investors see the potential of your business. Secondly, these numbers have to be backed by a strong basis to make them believe in those numbers.
Moreover, it is also important to make sure the investment amount you are asking for is justified.
How did you come up with the valuation? Is it realistic?
What gives you confidence in those numbers?
How would you be using the invested capital to grow your business?
Working out these numbers with strong logic and reason not only helps you plan your business better but also wins the confidence of investors.
In season 5 of Shark Tank America, a product called Kymera was pitched for $250,000 for 20% of the company.
Despite being an interesting product, the presenter’s inability to present a business plan led to no deal.
Lesson 3: Your Business Needs To Solve A Real Problem
Over the years of rising and fall of businesses, it is clear that a business that thrives is the one solving a real problem – whether it is based on survival needs or psychological needs.
While frozen food helps to solve the problem of the perishability of food items, Gucci is solving the need to distinguish oneself from others.
Moreover, in the face of ever-rising competition, the success of a business idea lies in its ability and effectiveness of solving a problem for its customers.
Shark Tank has featured many businesses on both ends – those solving some age-long problems and those far from solving any.
For example, a product called Scrub Daddy – an ergonomic utensil scrub that changes texture in hot and cold water – is one of the most successful developments in the history of Shark Tank, with sales of over $209 million.
It solves a real household cleaning problem by rinsing debris effectively and resisting odors for up to two months.
On the other hand, a product called Throx intended to solve the problem of losing one of the socks from a pair by packing three. Unless you are a serial sock loser, you would have a drawer full of the extra socks.
Unsurprisingly, the concept finds a place in one of the worst in Shark Tank.
To pitch effectively, it is vital to ponder on your business idea in the context of the situation you are trying to solve. What is the problem? Who are you solving it for? Why are you the one to translate it?
These questions can not only help you evaluate your business but also give a concrete picture to others, especially the investors.
Lesson 4: Test The Waters For Your Idea And Business Model Before Seeking Investments
Like solving a real problem, it is equally important to make sure that your customers perceive the problem and your solution the same way you do.
Furthermore, you need to ensure if the solution you are proposing already exists in the market and how your solution is different from them.
Not to mention, an untested business idea or business model can deter investors as there are too many uncertainties.
But, what if you need the very investment to be able to validate the solution by taking them to the customers?
Before you go full-fledged, there are many ways to validate your ideas. The best is to ask for feedback from people who fit into your target audience, industry experts, customers of your competitors.
Moreover, you can also build a minimum viable product (MVP) or a working prototype and test it with your intended customers.
Validating your business idea and model can not only help you see the problem areas but also find solutions and make more informed decisions.
A privacy app featured on Shark Tank called CATEapp shut down, despite securing an investment. The reason… its feature to hide calls and messages from selected contacts didn’t appeal to many. The downloads surged after it appeared on the show but soon died down.
Lesson 5: Align Information With The Timing Of Your Business
Investors look for quick returns. They opt-out from high growth potential products if they think those are not making profits any time soon.
Sometimes businesses are too early in their development. Sometimes they jump too ahead of themselves. Therefore, as an entrepreneur, it is important for you to have a good understanding of the stage your business is in.
Moreover, you need to be smart about such a situation and turn it around in your favor. Don’t reveal all information at once. Also check Recruiting Software
Note that you should not hide anything. It’s only about being strategic about the information you are providing.
Let’s say if you haven’t hit the market yet but have received a lot of positive feedback, focus on the feedback you got and how your product was useful unless of course, asked about market standing.
Lesson 6: Best Pitches Make An Emotional Connection
“People do not buy goods and services. They buy relationships, stories, and magic.”
These words of Seth Godin highlight a very important aspect of a business; that is, it is made for humans who are hardwired with emotions.
Time and again, businesses that struck an emotional chord compelled the Sharks to sign a deal.
The pitch by the founder of the water conservation product, called Tree T-PEE, is considered one of the most emotional pitches on Shark Tank. The story of his father and his genuine desire to help farmers not only moved Sharks to tears but also made them invest in the product.
So, your business’ worth doesn’t lie in only facts and figures. Your story, personal values, your vision, and your passion are equally important. And illuminating these in your pitch, whether it is to investors, your customers, or partners, can help you forge worthwhile connections.
Also, remember not to go overboard with the storytelling. Striking an emotional chord is about weaving the natural course of events in an engaging manner. Making up a story for the sake of it can do more harm than good.
Lesson 7: Don’t Focus Too Much On Yourself
While telling the story, it is easy to get carried away and make everything about yourself and your entrepreneurial journey. Many entrepreneurs have done the same on the show and lost a chance of potential investment.
As the investors are only concerned about how your business is going to make their money, any detail that doesn’t give them more insight into the business is a waste of time.
Moreover, you only get a few minutes, sometimes only a few seconds, to convince the other person. Hence, every second counts.
Your presentation must, at all times, try to fit the pieces of your business together.
Not to mention, it is important that you exhibit your personality with confidence while presenting. Displaying a positive attitude and commitment towards your work helps you win the trust of others.
Lesson 8: Know Who You Are Pitching To
One thing you’ll constantly see on Shark Tank is the Sharks backing out of a business pitch because it is not from the industry they work in. Similarly, a Shark can be seen as more interested in a business that deals in its domain.
This shines a spotlight on the importance of learning about the people you are pitching to. Obtain more information about the people (related to their work and investments) you are pitching your business to. This will help you customize your pitch accordingly.
Furthermore, it can also help during negotiations when you need to choose from more than one person. You should always go with the one who can provide more than investment in the form of mentorship or industry knowledge.
Regardless of who is on the other side, it could be your customer or even your prospective employee.
Learning about who they are will help you modify your message for maximum impact.
Lesson 9: Have A Negotiation Strategy
It wouldn’t be wrong to say the most exciting parts of a Shark Tank episode are the back and forth between Sharks and the entrepreneur when they negotiate an offer.
Negotiation and business are two sides of the same coin. Therefore, you must have a negotiation strategy in place for any business deal you are ever going to make.
You must have a plan for the best, worst, and acceptable scenarios keeping your business goals in mind. You should know your absolute bottom line for a deal, the parts you can’t compromise with, and the conditions that you can’t accept.
Having foresight of the implications a deal can bring to your business can empower you to negotiate effectively.
Lesson 10: Don’t Sell Yourself Or Your Business Short
On a popular platform like Shark Tank where you are standing in front of powerful people, it’s only natural to feel obligated and intimidated. In such a scenario, it is common for businesses to agree to the conditions thrown at them.
At the outset, it seems that entrepreneurs have a lower hand because they are the ones seeking a favor. However, don’t forget investors are also looking to gain as much as they can from a business.
This calls attention to the importance of knowing your and your business’ worth. Having confidence in your abilities and your business can save you from desperate deals which won’t efficiently satisfy your business needs.
Lesson 11: Learn To Keep Your Cool
Some of the Sharks are well-known for their mean or unfriendly remarks. Many presenters took it to their hearts and had a heated argument which led to their rejection.
The opinions of others can untouched no business. Many times it will be negative or even nasty. As an entrepreneur, one of the most valuable traits to embrace is to maintain calm in unpleasant situations.
Throwing an attitude, responding through sarcasm, or attacking in defense is a sure-shot way to reach a dead-end to a discussion.
In contrast, listening with an open mind and presenting your defense in a calm and solution-centric manner can open a door for positive outcomes. If nothing, it won’t leave bitter feelings on the table.
Lesson 12: If You Get What You Ask For, Take It
Having a negotiation strategy helps you tackle a situation where you are not getting what you ask for. But, in case the other side accepts your terms right away, you better take it.
Some entrepreneurs on the show asked for more when their initial ask was accepted. Of course, they lost the deal.
Such behavior gives the other side the impression that you don’t stick to your words and you can be difficult to handle. Moreover, it also shows that you haven’t valued your business correctly.
Lesson 13: Look For Value Beyond Money
The entrepreneurs want to get featured on Shark Tank mainly to secure financial aid for their business. However, a platform like this offers many other beneficial avenues.
Along with the willingness to invest, the panel has years of experience and expertise in their domain. Most importantly, they have a wide network of people from the same and different fields which can prove to be incredibly advantageous for your business.
In your pitch or during negotiations, mention to your potential investors that you would like to be introduced to their network.
Appearing on a popular platform like Shark Tank gives you inadvertent free publicity. But, if you are at a place not as popular, you can still reap more value.
For that, you should identify the value the other side can provide aside from the money, how it can benefit your business, and just ask.
Lesson 14: If You Get Rejected, Take Home Some Advice
As an entrepreneur, you will be facing rejection more often. Why not make the most of it?
If the rejection is coming from accomplished people like Sharks, it can be a huge opportunity to learn. Coming from their experience, they can help you with some wise words.
Whenever you discover yourself front to face with a rejection, you should try to know what you can do better to improve your odds. You can ask whether you need to modify your product or change your approach to business.
If the rejection is coming from a customer, you can learn what would have made them choose you instead of the competitor.
Lesson 15: Not Every Business Needs Investors
Yes! As counterintuitive as it may seem, it’s the truth.
Time and gain many ideas with a non-profit bent have been featured on the show. Sharks can be seen mentioning they should go for crowdfunding or donations, instead of seeking investment. Also check quiz makers
If your idea or business model isn’t inclined towards generating huge profits, investors would shy away from investing. Moreover, if the model is such that it is not scalable, it would not solve the purpose of the investors.
Note that you don’t have to change the course of your idea or the business model in such cases. You just need to figure out a different method of funding to sustain and grow it.
Lesson 16: Not Every Business That Secures Investment Succeeds
Securing an investment doesn’t secure the future of a business. Many businesses that received handsome sums on Shark Tank didn’t make a mark. Many even shut down.
Products like ToyGaroo, Body Jac, You Smell Soap, Qubits, and ShowNo Towels are counted as some of the biggest failures of Shark Tank.
The reason for failure for each differs from an inability to catch up with the demand to a soured relationship with the investors.
As an entrepreneur, you must keep up with all aspects of your business. Investment alone cannot solve every problem.
Customer needs, market demands, business relationships, growth strategy and execution, and perseverance – all contribute equally to the success of a business.
Lesson 17: Failure Is The Road To Success
Finally,, one of the most important lessons entrepreneurs can learn from Shark Tank is to keep moving forward.
A lot of products that were turned down by Sharks are highly successful today.
Rocketbook, a reusable paper notebook business, did not get a deal because Sharks thought users would find microwaving it to make it reusable to be cumbersome.
But until now it has hit over $10 million in sales.
Sharks hesitated to invest in The Bouqs Co. as they were not familiar with the flower industry. However, three years later, Shark Robert Herjavec gets flowers from them for his wedding, and impressed by their service, decides to invest in the company.
Besides these, there are countless examples of businesses that have achieved success due to their sheer persistence and optimism.