Over the past few years, you could say that Shark Tank has become one of the best sources of education for entrepreneurship. If you were to watch every episode, you wouldn’t have a BA in business, but you would definitely have the knowledge needed to successfully build a business. Putting that knowledge into action is what differentiates between the greats and the rest.
To help you put that knowledge to use and become one of the “greats”, here’s a quick summary of nine important entrepreneurial lessons from Shark Tank. It’s on you to put these tips to use in your future pitches and business practices.
1. Don’t Be Over-Zealous
Time after time we’ve seen entrepreneurs hit Shark Tank and get offers from one of the sharks. However, some of these optimistic entrepreneurs are too optimistic and at times they try to out-smart those with experience by trying to get a better deal with that shark or by going to another one.
We’ll be the first ones to tell you not to sell yourself short, but at the same time, you need to know who you are dealing with. All of the sharks bring more to the table and that needs to be considered. When doing business remember that 50% of something is better than 90% of nothing.
2. Understand Who’s on the Other Side
Following up that last point, you need to understand who you are doing business with. Do they have a good or bad reputation? What kind of experience do they have? At the end of the day, your business is not going into business with other another business. You are going into business with other people.
You don’t want to end up like Barbara Corcoran after she invested $50,000 that all went into throwing a party. She clearly misread who she was going into business with (Mix Bikini now Versakini). She learned from her mistake – that’s part of what makes her a shark (never make the same mistake twice).
3. Know the Ins and Outs of Your Business
If you don’t know your business, how is someone supposed to invest money in said business? Numerous Shark Tank presenters have lost a potential investment because they did not know the fine print details of their business. Your business is like a child…I don’t think you’d forget allergies, important dates, and other details of your child’s life, so don’t forget the details that make up your business.
Learn from the common failures of the show’s participants by knowing more than just the greatness of your products. Know all of your margins, costs of customer acquisition, current and future distribution channels, valuation, and other key details is important for you to know for yourself and for your business.
4. The Best Offense is to Stay Calm
Some of Shark Tank’s participants haven’t done the best job of taking in feedback. They get defensive and go on the offense to try to discredit the feedback. The ability to actively listen and take in what is being said to you – especially from someone with a boatload of experience – is a very valuable asset that only highly successful business leaders have. All of the Shark Tank investors can offer game-changing advice when someone gets turned down. If they see someone willing to listen, they’ll get the feedback.
If you want to take your business to the next level, you’ve got to be able and willing to listen first. If you’re going to respond, make sure your counterpoints are phrased as clarifications, and not as a rebuttal.
5. There’s No Deal Until it’s Signed
Heard of due diligence? To keep things short, it’s a background check for companies. Even when it seems like a deal is struck on Shark Tank, there still isn’t a deal, rather only the basic agreement to work toward a deal. According to insights from the sharks themselves, as little as one-third of the deals that are made on the show (and in some cases 70%) are actually closed. Hyconn had an agreement to sell 100% of the company to Mark Cuban – but that never happened.
You can be excited when an agreement on a new deal has been agreed upon, but until all sides haven’t signed on the dotted line the deal doesn’t exist. Don’t mistake an agreement made while speaking, with a contract. Agreement or no agreement, you’ve got to keep on going out and giving it your best, and hope that the lawyers of both sides can get a deal done.
6. The Spotlight is On the Customer
Yes, investors invest in people, so they do want to know who you are, but the best way to show them who you are is by being a professional. One example of professionalism is focusing the pitch around your customers and not around yourself.
Last year on Shark Tank we saw Michael Elliot of “Nail Shop for Guys” miss out on getting funded, despite his riveting personal story. You’ve got to feed the sharks, or whoever you are pitching, the right bait, which isn’t always your own personal story. In business, the right bait means stats and figures that show how customer needs and spending are in your favor
7. Understand “Why”
In one episode Daymond John asked an entrepreneur to sell him a pen. He by no means blew John away, but it was all in all, a good sales pitch. However, the pitch could have been much more electrifying had he asked Daymond John “why” he wanted a pen.
If you are pitching (marketing or selling) something to someone you better know “why” they’d want it. You don’t necessarily need to personalize it to a macro-level, but the more you know regarding the “why”, the better your odds become.
8. When Do You Walk Away?
You can’t know where your business is headed if you haven’t calculated valuation and future budgets. Thus, when walking into a pitch you’ve got to know ahead of time what you are looking for. On Shark Tank, more than once an entrepreneur has found themselves on the “low-side” of the deal (the sharks reduced their offer), because they didn’t know their bottom line going into the pitch.
An entrepreneur that is undecided of what they need or what they’d accept is going to get them in trouble. Either they’ll end up with nothing, a deal that leaves both sides worse off, or a deal that leaves the entrepreneur at the investor’s mercy.
9. The Pitch is an Art Form
Like any other art form, the pitch needs to be perfected. For some products creating a video is the right move while for others the best strategy might be to bring an MVP (a basic prototype) of the product. For others, a simple prop might be the better move. In Shark Tank, we’ve seen more than one entrepreneur have a dud of a presentation while using each of these formats. You need to do your homework on which one works for you.
If you can’t captivate who you are speaking to, you won’t get your point across. Having a great presentation doesn’t mean you need to create something wild. Of the pitches on Shark Tank, those that just wanted to stand out (without thinking of how to add value) were only successful in getting funding 11% of the time.
Pitching your business to an investor, partner, or a strategic customer does not have to be like pulling a tooth, if you are willing to put in the work before, during, and after the pitch. Have you had any experience pitching to your own set of sharks? Was that pitch a good experience? Feel free to share any of your thoughts or questions in the comment section below.