5 Things Entrepreneurs Can Learn From Shark Tank
:: By Hobbs Karg, Fueled ::
Shark Tank, if you’re not already aware, is the hit television reality show (now available on the WATCH ABC app for iOS and Apple TV) where entrepreneurs bring their business ideas to the table where multi-millionaire and billionaire investors sit and are able to choose to invest “X” amount into the company as a loan while receiving “X” percentage of equity.
Companies not only get the funding, but they can also boast how they have “so-and-so” from Shark Tank as an investor, as well as gain exposure from the show.
Here are a few things to remember when you’re thinking of following the entrepreneurs on Shark Tank.
Shark Tank is for Entertainment
While this should be obvious, I will reiterate that Shark Tank is purely for entertainment purposes and should not be taken too literally. The majority of deals don’t actually get funded (like this example from How Do You Roll), and the process expressed in the show is much more watered down than in reality. You have to remember that one of the 25-minute pitches you see in reality can take longer than an entire season of the show. Raising capital for many months on end doesn’t make for optimal television.
Perfect Your Pitch
If there’s one lesson to take away from the show, it’s to master the art of the pitch. For television purposes about 50 percent of the pitches you see on the show are engaging and effective, while the other 50 percent are mediocre or terrible in order to build comedic aspects of the show. You have to learn how to effectively communicate your vision to possible investors. A great pitch can be the difference between whether or not your company gets the set amount of investment it seeks.
Hard Work Pays Off
Though it’s a phrase too often used in the entrepreneur industry, it’s one that shouldn’t be taken lightly. In business, you have to work hard to become successful, but hard work still won’t guarantee succeed. If your business is flawed and your product is useless it won’t matter how hard you work. Work hard, but make sure you’re working hard in the right direction towards efficiency and practicality.
Know Your Business
You have to know your business and the industry you’re in as much or better than anyone you’re presenting to. You need to have your numbers down: sales, cash flow, debt and so on. The Sharks (as the investors are called) hesitate making a deal with entrepreneurs who don’t know critical data points. Knowing your number will only take you so far; you have to have a concrete understanding of the industry you’re in. There are many cases where entrepreneurs on Shark Tank pitch what they think is truly unique only to be informed that a similar product already exists. Before you start your business make sure you research the hell out of the industry you’ll be competing in.
Don’t be Blinded by Your Passion
Another recurring theme in the show is the overly passionate entrepreneur who’s poured everything they have into their product and is convinced their product is “the next big thing” that will change the world. It’s hard to bring these type of people back to earth, especially when their idea is actually a dud. Just like hard work can’t guarantee you success, if nobody buys your product it won't matter how much passion you have. As a matter of fact, too much passion can blind you to warning signs you may otherwise see. You don’t want to get to a point where you have invested years of your life and thousands of dollars into an emotionally and costly failure. There’s nothing more sad than seeing an entrepreneur on the show admitting to have taken out a second mortgage to fund their dreams. Be aware of your industry, your product, and both you and your enterprise's capabilities.
If you are an up-and-coming entrepreneur this isn’t meant to discourage you into steering away from the industry. This should be used as helpful advice to follow in order to help you succeed in one of the most competitive industries. Shark Tank is a fun and intriguing reality television show to watch, but that’s about it. Make sure you remember that it is for entertainment purposes only and you’ll do just fine.
Hobbs Karg is a content writer at Fueled, the leading Apple TV app developer in New York City, renowned for its award-winning mobile design and strategy.