In my last post, I mentioned that I love to learn from a variety of sources including television. Today I’m going to share how I learn business and investment strategies from my very own television.
Hands down, my favorite television show is ABC’s Shark Tank. In short, Shark Tank brings American entrepreneurs who are looking to raise capital for their business. The entrepreneurs pitch to 5 self-made multi-millionaire ‘Shark’ investors. After waiting almost a year for Season 3 to appear, I can now enjoy to watch my favorite show again. But why is Shark Tank regarded as my favorite show? Simply put, I can apply what I learned from the show into my own life!
This show is not just any reality television show. Real money is at stake here! People are actually investing and people are becoming rich! Since watching this show, I have learned 6 requirements that the ‘Shark’ investors look for…
1. Do You Have Any Sales?
This is always the very first question the ‘Shark’ Investors ask, especially Kevin O’Leary. Do you have any sales?
And it’s a great first question to ask. Why should an investor put his or her own money in you if you do not know if your product can sell or you barely have anyone wanting your product? Only the products that have great sales history actually get invested.
In addition to sales, the investors always ask, “What are your margins?” In elementary terms, after you sell your product, how much profit are you making? If you are not making any profit, investors might not be interested.
This is a great Shark Tank video example that proves this point!
2. Is the Entrepreneur Worth Investing In?
Sometimes the entrepreneur can be a pain to work with. Investors don’t want to partner up with someone they have a hard time working with. And it’s a smart thing to learn from too! Don’t force yourself into something even if the idea is great! Business should be fun, not a pain! Business people should always think the same way and have similar visions for the business.
Furthermore, each entrepreneur should be full-hearted to want their business to be the best. Are they more focused on another job or are they making sacrifices to make their business the very best!
This episode will explain this point better. These two guys created an awesome business plan but they are not full hearted business people, more like politicians.(At around 5:30, Kevin O’Leary disregards investing in their business because of this.)
3. Is the Product Unique?
This is very important! We live in a world now where we see very similar products over and over again. How is your product different and can your product improve life? Does your product make you say, “Why didn’t I think of that?” Those are the best products to look after. Products that are different stand out more and make your business excel faster.
What does your good or service provide that no one else has? It’s a worthwhile question to ask. Really, why should I buy your product when I can get the same product down the street (and for much cheaper)?!
Here is a video of a unique product. Keep watching the entire video, the owner doesn’t show the product that could be sold broadly until the middle of the video.
4. Is the Product Being Distributed?
This is a big one the investors want to know. How is the product being distributed and at what cost? Most people who go in sharing their pitch have no clue how they are going to distribute. It is almost kind of sad. Knowing who will distribute, at what cost, where you are distributing (potential customers) is very important.
Watch this episode on what I am talking about. Distribution is key, even if you are selling cakes!
5. What is Your Company’s Valuation?
The company’s valuation is the very first thing that is usually mentioned in every episode. Most business owners value their companies way above and beyond then what their present value should be. They project that their business is so great and give a huge value on their business.
Word of Advice: Always value the company at it’s Present Value! Good investors know when the company is valued too high. Just be honest. A company’s valuation that is false in the beginning is worse than the true statement. Honesty will always get you farther.
This is exactly what I am talking about valuing your company too high!
6. Can the Product Be Sold Broadly?
This is something new entrepreneurs forget to think about. Usually an entrepreneur has a wonderful idea and a great product, but they can only sell it to a certain group. These products are very limited! You can make much more money selling to everyone! Those are the products that do very well!
Take for example the wonderful product the Snuggie. Everyone can wear one. Ya, the idea was horrible but it sold millions. In fact, I even have one! The Snuggie can be sold to males, females, children, and even grandparents.
This is a Shark Tank example where the entrepreneur was limiting himself on customers because of his product (This one is pretty funny!)
As I said before, you can learn from all around you, even a reality television show. I hope I got you interested in this show and actually start watching it.
Shark Tank shows on Friday 8/7 central on ABC.