As entrepreneurs we often find ourselves driving our businesses with very little direction. This is a part of the process, but it can be frustrating when you are not seeing progress or results as quickly as you would like. In order to avoid this and get your business moving in the right direction, here are some lessons from Shark Tank that might help guide you on your journey.
The “shark tank lesson plans high school” is a business book written by Barbara Corcoran. It contains 9 lessons that are meant to be helpful for entrepreneurs who have just started their own businesses.
I don’t watch much television since I don’t have time with two little children and a business. But there is one program that I record and watch every week without fail: Shark Tank.
Here’s the concept for those of you who aren’t acquainted with the show:
Aspiring entrepreneurs have a once-in-a-lifetime chance to present their idea to a panel of “sharks” — a group of five self-made millionaires and billionaires like Mark Cuban and Daymond John — and ask for investment in return for stock in their company.
It’s essentially a dramatization of one of capitalism’s most stressful, sweat-inducing, make-or-break moments: the business pitch.
On any given episode, you’ll either witness brilliant and creative firms earn hundreds of thousands (or even millions) of dollars in funding, or you’ll get to see a bizarre, hilariously terrible company get eviscerated by the sharks.
While the companies are genuine and the entrepreneurs really do spend an hour or two with the sharks obtaining comments on their goods or ideas, the film is then combined and edited together into 5 minutes of amusing television. Producers apparently hand-picked the firms that are hilariously terrible for that reason.
Shark Tank, although being created for your entertainment, also provides a solid dose of practical, real-world business advise for would-be entrepreneurs. Although you won’t obtain an MBA-level education by watching the program, you’ll be astonished at how many useful business insights you may learn simply by checking in each week.
I’ve listed nine of the most common entrepreneurial lessons I’ve learned watching Shark Tank below:
1. Master the art of pitching. If you just remember one thing from Shark Tank and this article, make it this: master the art of the pitch.
Even if you don’t believe you’ll ever have to pitch yourself or your concept to a group of venture capitalists, every entrepreneur has to know how to market himself and his idea to possible partners, workers, and clients/customers.
You’d think that on a program like Shark Tank, when contestants know they’ll be asking for tens of thousands of dollars on national television, the entrepreneurs would spend a lot of time practicing their presentation.
But you’d be mistaken.
I’d guess that 50% of Shark Tank proposals are terrible, 40% are OK, and 10% are fantastic. Some of the Shark Tank contestants seem to be winging it, which leads to some uncomfortable yet funny situations.
“You must learn to convey your ideas.” Every morning, you must rehearse in front of a mirror. Because you only have one opportunity to create a first impression, it’s the most crucial thing you can do. And you must be able to convey why the concept works and why you are the best person to accomplish it when you stand in front of sharks or other investors.
‘Look, all this stuff you’re learning about statistics is fantastic, but if you can’t get up in front of your peers and explain why you’re a winner and how you can be a leader, and how you can inform that business plan, you’re nothing…’ I often tell young people who I now teach in business school. Until it occurs, you’re simply a nothing burger.’” –Mr. Wonderful, Kevin O’Leary
So, how can you prevent being one of Shark Tank’s cringe-worthy pitchers? Following the tips in our piece on how to deliver a great pitch (along with what not to do) will put you miles ahead of the competition. The advice in those pieces boils down to being poised, making your presentation sticky or memorable, knowing your company (and sector) through and out so you can answer any question, and playing to the investor’s self-interest (show them the money!).
The finest pitch I’ve seen on the program came from an 18-year-old girl who runs Simple Sugars, a skincare firm. She had a great story for her product (started the company when she was 11 to create an all-natural skin care product that was suited for someone with eczema, like herself), she knew her business inside and out, answered the sharks’ questions and resolved doubts like a boss, and she clearly demonstrated how the sharks would make money investing with her. Her outstanding proposal landed her a $100,000 contract with Mark Cuban. You should watch this young lady pitch if you want to learn how to pitch like a pro.
2. Hustle is important, but it isn’t enough. “But I’m such a hard worker!” entrepreneurs on the program often say when they’re about to receive the nix from all five sharks. I’ll work day and night to make this company a success!” And each time, one of the sharks, typically Mark Cuban, would say something along the lines of, “You and everyone else on this program!”
We’ve claimed that people that hustle own the world. Yes, it does. You won’t go far in life if you’re a slacker. However, in business, bustle is unavoidable. To be successful, you must work hard, yet working hard does not ensure success. It doesn’t matter how hard you work if your company stinks and your product is a total lemon. You’re going to fail miserably.
If you’re going to hustle, be sure you’re going in the proper way.
3. Don’t let passion mislead you. Another frequent topic on the program is the overly-passionate entrepreneur who has poured their heart and soul into their product and is confident that their company is the next great thing/will change the world…despite the fact that everyone else can see that their concept is a complete flop.
“I believe that passion is exaggerated. Everyone has a variety of interests. I have an interest for both sports and music. That doesn’t make it a company, and it certainly doesn’t qualify you to operate it.” –Mark Cuban, entrepreneur
It’s difficult to criticize these people. Their passion and emotion are well-intentioned, and in our day of “overwhelming meh” aloofness, they are laudable. You should ideally like doing whatever it is you’re attempting to earn money at. Passion, on the other hand, is insufficient. If no one wants your product or service, enthusiasm in spades won’t miraculously convert your firm into a success, just like hustling won’t turn a sow’s ear into a handbag. Indeed, unrestrained devotion may make you oblivious to warning indications that you’re on a sinking ship – before you realize it, you’ve sunk years of your life and thousands of dollars into an emotionally and financially draining disaster. When entrepreneurs on the program confess to taking out a second mortgage or depleting their children’s education funds to follow a dream that all of the sharks reject down, it’s heartbreaking. Such a disastrous anagnorisis might have been prevented if they had led with their heads instead of their hearts.
4. Just because your friends and family think your concept is brilliant doesn’t imply it’s a good one. I can’t tell you how many times I’ve witnessed someone present a company that is plainly a disaster, only to be astonished when Mr. Wonderful says, “This is insane!” I won’t let you go any farther!” How do these sceptical would-be entrepreneurs always react? “However, everyone of my family and friends believe it’s a fantastic idea!”
They do, of course. They’re your family and friends. It’s the halo effect: people believe you’re amazing, therefore they think everything you do is fantastic. Even if your friends and relatives see that your company concept is a dud, they are unlikely to say so. Because they’re afraid you’ll shoot the messenger, they’ll just give you what you want to hear.
Take, for example, the “Elephant Chat” founders, who are a husband and wife team. They put $100,000 into designing their product, a plush elephant stuffed within an acrylic “communication cube” that a spouse could set out on the counter to alert their partner that they wanted to speak about a relationship problem (“the elephant in the room”). It cost $60 at the time. They said that everyone they spoke with felt it was a brilliant concept. None of the sharks were interested in the bait.
Be wary of the family and friends filter, in addition to being dazzled by your enthusiasm. Always, always, always, always, always, always, always, always, always, always, always, always, always, always, always Better still, put your concept to the test on the merciless general public to discover whether there’s even a market for it.
5. Be knowledgeable about your industry. We have said that knowing your company is essential for good pitching. But what precisely does it imply?
“Know your industry and company better than anybody else on the planet.” –Mark Cuban, entrepreneur
To begin, you must understand your figures, including sales, cash flow, debt, margin, and so on. Sharks are typically hesitant to make a transaction with entrepreneurs that lack critical information, such as their client acquisition expenses.
But knowing your company entails more than just knowing your statistics; it also requires a thorough awareness and comprehension of the market in which you compete. Many entrepreneurs go on the program with a product or service they believe is genuinely unique, only to be told by one of the sharks that a product or service that is extremely similar already exists. They could have averted the humiliating “surprise” if they had done a little more research.
There are also plenty of entrepreneurs who come on the show with dreams of conquering specific industries (food, clothing, apps, etc.) but have no idea how those industries actually work; for example, they have a food item they want national grocery stores to stock, but they have no idea how much money big corporations spend to secure shelf space, or how difficult it will be to break into the market. As a result, their success strategies are naïve at best and hopelessly misplaced at worst.
A couple of physicians proposing Rolodoc, a social network for their fellow doctors, was an excellent example of entrepreneurs that came to Shark Tank without fully knowing their sector (or even business). Despite the fact that their company plan was meant to center around social media, the doctors had no understanding how it functioned or even what it was. As a result, they fumbled over even the most fundamental queries concerning how their concept would be implemented and how it would generate revenue. It was dubbed “the worst pitch in Shark Tank history” by Mark Cuban.
Before you start your company, conduct extensive study about the sector you’ll be competing in by reading industry journals and blogs and speaking with others who are currently in the area. Pick up a Dummies book — there’s one for just about every sector you can imagine. This period of study might take months, but it will save you a lot of trouble in the long run.
6. Concentrate on your primary skill. An established successful company may join the tank in search of further funding to develop and flourish. That’s not a problem. The issue emerges when one of these businesses wants to utilize the funds to grow into a related product line or service that is unrelated to their main strength. Most sharks are wary of these companies and will warn the entrepreneur that they will only invest if they abandon their aspirations for a larger product range. Why would they want their money invested in an unproven product or service rather than a tried-and-true winner?
In business, it’s OK to experiment and try new things, but never lose sight of your main expertise. Many a company has failed due to becoming distracted. This is particularly true these days, given the volume and accessibility with which you can acquire input on social media; you can have a number of people saying, “I wish you guys would create this too!” leading you to feel there’s a widespread need for a new company growth. Then it was discovered that the commentators were really a tiny but disproportionately vociferous group.
Figure out what you’re excellent at and stick to it.
7. The most successful firms are those that tackle real-world issues. Entrepreneurs that are successful at obtaining deals frequently have one thing in common: their company answers a genuine need. Typically, the issue that the entrepreneur sets out to address is one that they have personally encountered.
Typically, firms that fail to get finance do so because they do not answer a real need. They’re either novelty items or items that claim to remedy an issue that doesn’t exist. Occasionally, a shark may invest in a novelty item because they perceive a potential to earn a lot of money quickly by riding a trend or craze, but for every one of them, there are novelty products like Man Medals – novelty things that are as stupid as a rock, not the next Pet Rock.
8. It’s simply a pastime if you’re not producing money. “Any firm that isn’t successful after three years isn’t a business, it’s a pastime,” Kevin O’Leary says. Hobbies are quite OK. They’re entertaining and provide you a creative outlet. But don’t deceive yourself into believing that just because you’ve sold 8 bars on Etsy, your little manly-scented artisanal soapmaking venture is a sure thing. If you’re investing a lot of money into your project but getting little in return, recognize it for what it is: a fun hobby.
9. Investors aren’t required for every firm. Some entrepreneurs go on Shark Tank in search of an investor to help them develop an existing successful firm, only to be advised by the sharks that they don’t need an investor and should instead continue to bootstrap the company. This, I believe, is an essential but sometimes neglected aspect. Many prospective entrepreneurs mistakenly believe that if they want to thrive in company, they must have investors, thanks to a corporate culture that celebrates multimillion-dollar venture capital agreements.
Without the help of investors, many great firms have bootstrapped their way to success; with a strong concept, hard work, and smart money and resource management, they are able to support future expansion with the cash flow they have coming in. Bringing in an investor would accomplish nothing more than add another chef to the kitchen – and another hand in the pie.
“Banks are not forgiving, and the last thing you want to do is establish your firm with the goal of repaying the bank before investing further.” “Equity is significantly superior, and sweat equity is the most effective.” -Mark Cuban, entrepreneur
Furthermore, some firms are just unsuitable for investment. Typically, investors want firms that can grow and rapidly expand. Unless you’re ready to license your design to a factory in China, you won’t be able to expand a firm that specialized in handmade wooden chests manufactured by you. However, supervising the bulk manufacturing of wooden chests may not be what you want to do as a career, and you’d rather keep things small – generating less money but being more involved in the job.
Taking venture funding involves giving up control in the end. We’ve been contacted with VC offers a few times, but we’ve never taken them seriously. When you hire individuals who are just concerned with the bottom line, they will begin pressuring you to do things that are inconsistent with your beliefs and vision. “We need to blow up the Art of Manliness and get more traffic!” Why don’t you write more often and do something like, oh, I don’t know, like ‘hot female of the month’ posts?” No, thank you.
Before you go out looking for money, ask yourself whether you truly need it. Is it possible that we won’t be able to continue to expand without it? Are we the sort of company in which an investor would be interested in investing? If that’s the case, what would we do with the additional cash? Do I truly want to relinquish control of my company?
Also, look no further than our pals at Huckberry if you’re searching for a wonderful bootstrapping success story. I’m blown away by their success — they keep expanding and growing, and they’ve done it without the help of venture capital. Check out this wonderful post on 37Signals for an inside look at the rewards and pitfalls of choosing this road.
If you’re an aspiring entrepreneur, I hope you’ll heed all of this advise, else, in Mr. Wonderful’s words, “You’re dead to me!”
What have you taken away from Shark Tank in terms of business? Please share them in the comments!
Watch This Video-
The “shark tank activity worksheet answers” is a blog post that contains 9 lessons from Shark Tank. The article goes into detail about how these entrepreneurs were able to succeed, and what the key takeaways are for those looking to start their own business.
Frequently Asked Questions
What did you learn from Shark Tank?
A: I learned that the Sharks are a group of individuals with unique personalities. Some have strong opinions and others do not care much about what they invest in, as long as it is profitable.
What is the business concept that was presented Shark Tank?
Does Shark Tank actually help businesses?
A: Hey, I have this business idea. What do you think?
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