As an entrepreneur, startup founder or simply thinking of starting up your business, you may be hoping to raise a round of financing from angel investors or venture capitalists. For a fast education on how to prepare, turn on your television, or go online and watch the Shark Tank. It is much more than reality tv and entertainment, and it may be the proper preparation for the brutality that may await you if you do make a pitch in front of VCs. Shark Tank is in its eighth season, and Kevin O’Leary, Barbara Corcoran, Daymond John, Robert Herjavec, Lori Greiner and Mark Cuban have each brought a personal touch and a lot of personality to what makes a business desirable for one to invest its funds, but there are some consistent takeaways.
“Most people think it’s all about the idea. It’s not. Everyone has ideas. The hard part is doing the homework to know if the idea could work in an industry, then doing the preparation to be able to execute on the idea.” — Mark Cuban
Be Prepared To Answer the Ins and Outs of your industry.
Consistently the entrepreneurs featured on the show failed to present winning arguments to the sharks because as passionate as they may feel about their business, the numbers presented do not support and match the story. It is one thing to have energy, charisma and passion for the business but being able to articulate that passion with good financials to back it up is another. Most presentations to the Sharks are made up of a team of two. Pick your teammate carefully; it’s good to have one creative person onboard and one that just focuses on the day-to-day operations and crushes the numbers. Nevertheless, it is vital that all team members be prepared to fully divulge their financials and know the insides and out of their industry. Know the market, the competition, have financial predictions on what the market bears this year and not in an imaginary future. Be so prepare that your competition will shake in its boots. Knowing who your competition is and meeting it heads on plays a significant role in beating it.
The difference between the real winners is how long they take to feel sorry for themselves. My winners feel it… but they come back up and say ‘hit me again.’” — Barbara Corcoran
We all make mistakes. Learn from yours.
In the process of building your business or simply on the path to even think about starting your business, as an entrepreneur, you have made mistakes. It’s human. It’s growth. It’s a good thing. Perhaps you partnered with the wrong teammate, or your timing was off, or you lacked focus. Mistakes are as colorful as you are. Make them work for you. If you royally failed and had to restructure, dump inventory, get rid of your partner, be honest about it, everybody loves a comeback story, and it will make you relatable. Use your past mistakes to highlight how smart you truly are. It shows that you don’t get stuck in the past and can move forward with new concepts and innovations. That’s a very appealing trait to potential investors because it demonstrates that if they have some ideas on how to improve your business, you may be open to hearing them.
“Learn as many mistakes and what not to do while your business or product is small. Don’t be in such a hurry to grow your brand. Make sure that you and the market can sustain any bumps that may occur down the road.” — Daymond John
Be prepared to invest your funds into your business if you want others to part ways with their hard-earned cash.
It is simply ridiculous to expect investors to open their wallet if you haven’t been willing to invest in it yourself. It simply does not inspire confidence to those you are seeking help. Investing in your business means many things, yes, definitely it means investing in research, buying equipment, human capital. It also means investing in growing and educating yourself and taking advantage of the best tools around, attending webinars, taking classes, joining business associations. It also means having a nest egg to give your business room to expand and take flight.
And finally, trust yourself. Nobody understands your business the way you do. Know when to move forward and sadly enough if necessary, when it may be time to let it go. As Mark Cubans said, “Follow the green, not the dream.” and if one dream doesn’t live up to your expectations, take stock, reassess and be honest with yourself about whether entrepreneurship works for you or not.
“I learned that nobody’s better than you at getting your business off the ground. The experience you get is priceless.” — Lori Greiner