I love the water cooler conversations at our office on Monday mornings now revolve around the previous night’s episode of Shark Tank.There’s a lot of assessment of the worthiness of the business ideas pitched, the often seemingly crazy valuations presented, and the decision of the sharks to invest — or more commonly not — on what was presented.
A common theme is our absolute bewilderment that the people pitching have been prepared to sink so much time, effort and money into ideas that they seem to have never tested beyond their own family and friends, with no real assessment of market size or interest.
I think the lessons Shark Tank provides are invaluable for anyone considering starting their own business, and I’ve summarised our water cooler consensus on what the key takeaways from the show are here.
1. Tell the story of your business quickly, clearly and concisely, illustrating the problem it solves or the need it fills. Be well rehearsed, deliver confidently and make sure you have practised in front of an audience who will provide honest feedback. You don’t want your first run through to be in front of your potential investors.
2. Know your numbers. Your current sales and costs, the (realistic) size of the potential market and what scope there is for reducing your product cost as you grow. Have a realistic valuation. I Can’t emphasise this one strongly enough, some of the valuations being presented on the show seem completely crazy, and they are missing out on investment as a consequence.
3. Be clear about what you are looking for beyond money. Money isn’t that difficult to find, it’s the contacts, knowledge and experience that investors can also bring that deliver far more value than dollars alone. Investing in start ups is a risky game, and many investors will only invest in businesses where they feel they can deliver value over and above the dollars as this adds to their confidence that their investment will bear fruit. If you’re clear about what skills and expertise you feel would help your business grow, and an investor knows they can deliver those, it increases your chances of closing the deal.
My number one takeaway though is this: how great it is that Monday morning conversations now focus on the merits of different entrepreneurial ideas, pitching skills and valuation mechanisms rather than who got voted off islands, kitchens, or house renovation projects. Anything that shines a spotlight on entrepreneurs who are out there putting everything on the line for the ideas they’re passionate about will always get my vote!