As an entrepreneur, there are only two reasons that could possibly explain why you haven’t yet heard of Shark Tank. You’re either living under a very large rock, or you’re hanging out under a very small one.
This show has done wonders for a few small businesses and more importantly, contains some great advice for entrepreneurs. Some elements of the show are purely for entertainment purposes, but there are more than a few pearls of wisdom in the mix — especially from Mark Cuban, who happens to be my favorite shark.
Here are five lessons that every entrepreneur can learn from watching Shark Tank:
Learn your elevator pitch
The sharks don’t have all day to listen to a sales presentation, and this is a great example of what happens in the real world. Investors work with people who know what they have to offer, and can quickly explain the benefits and rewards. Here are some key areas your pitch should cover:
- Who your business serves: You must know your customer intimately, and understand why they need your product. If you haven’t done so, create a customer persona to help you develop a clear and concise picture of your target audience.
- Why your product or service is important: Even the silliest products and services have a certain level of importance, which you’ll need to quickly convey. Think about your customer and their needs. Does your entertainment product help bring families together? Does your accounting software help small business owners save money on high-cost accountants? Knowing this information offhand is key to quickly landing an investor, partnership or other business opportunities.
- What you’ve accomplished so far: No one is interested in how you started building with Legos at age three, but you should have a brief rundown of what your business has accomplished thus far. This could be anything from receiving an award to helping your local Head Start class obtain tablets for students. Perhaps your company helped raise funds for a nonprofit. If it’s good news, it’s noteworthy and has a place in your initial pitch.
- Know your numbers: If you’re on team Mr. Wonderful (a.k.a. Kevin O’Leary), then this one is for you. The numbers are often considered the most important part of your business. There are several financial aspects that you should be able to recite at a moment’s notice, including quarterly and yearly revenue, cost of goods sold (COGS) and your company’s valuation.
Market your unique value proposition
If you’re coming out with a new line of plastic food containers, you probably won’t do so well with companies such as Tupperware and Hefty cornering the market. When you’re in competition with the big fish, you have to market your unique value proposition (UVP). In other words, explain why you’re not just another “Joe Schmo” with the same items as everyone else.
Test your market
Whether you’re using a tool like Google Keyword search results, or an actual face-to-face survey, it’s important to test the market before stepping on the gas. You don’t need a large budget to test the market. These five methods can do wonders for your research:
- Monitor social media trends
- Use Google’s Keyword Planner
- Search top products on sites such as Amazon and Ebay
- Monitor sites such as Quora and Answer.com
- Conduct an online poll
- Consumers have the pick of the litter when it comes to purchasing. Don’t blindly jump into a business not knowing if people are going to respond. Proper research can save time and tons of money in the long run.
Don’t purchase too much inventory
The sharks are constantly scolding entrepreneurs who invest in too much inventory without the sales demand to back it up. This is a common concern for new businesses and one that’s addressed in financial and startup seminars abroad. The amount of inventory that you should have on hand varies according to your industry, but if you’re not moving it, and it’s been sitting for more than three months, then you have too much.
You need drive and passion
In your business, there will be ups and downs (trust me — I know). If you’re not passionate about the company, the downs will become overwhelming, and you’ll ultimately give up. And your drive will keep you motivated when you don’t get the results you were expecting.
Some entrepreneurs make it all the way to the tank, only to have their ideas shot down. Even then, most are determined to succeed, with or without the sharks. That’s the type of drive and determination you need to keep you afloat, especially during the early years of business.
Whether you like Shark Tank or not, there’s no denying the power in the lessons entrepreneurs can learn just by watching. I’m always tuned in and waiting to grab a few new pearls.
Justin Beegel is the founder of Infographic World, a visual communications agency specialising in infographics, animations and interactive media.
The Young Entrepreneur Council (YEC) is an invite-only organisation comprising the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship programme that helps millions of entrepreneurs start and grow businesses.