How to be Prepared for the Shark Tank
Posted on | May 11, 2012 | 1 Comment
Before you go on the shark Tank, do your homework and know which sharks are best for your product. Find out about their backgrounds, personalities, and track records (how successful are they with helping businesses become successful). If you’re fortunate enough to get a deal with a shark(s), you will also be scrutinized as part of the shark’s due diligence effort which can last many months. So, you should do the same to them before you go on.
In addition to the homework, make sure you practice, practice, practice, and more practice. Make absolute sure you have rehearsed your business presentation speech so that you are flawless. Remember: first impressions go a long way in whether the sharks will have confidence to invest in you. When they invest in your business, they invest in you. If you saw someone who had difficulty telling you exactly how your product works or your business plan, would like want to invest in that business? I doubt it.
Conduct an honest review of your product or service. Ask others for their opinions on whether they think your product is appealing enough for a large segment of the population. If it isn’t, then it’s likely that the sharks will not be interested. Remember: they generally do not like to invest in niche-type businesses even if you have sales. Speaking of sales, make sure you have some. Although it’s possible that an idea alone can be sold to the sharks, they would be much more inclined to invest in an active business with a sales history rather than take a bigger chance on an unproven product.
Don’t be one of the losers who go on the show with little or no idea about their numbers associated with their companies. Don’t be like the three fools who went on the show trying to sell their beer-flavored ice cream. They weren’t able to articulate the total dollar amount of the orders they currently had. They argued that they were not accountants and were looking for the sharks to provide that type of support. Robert Herjavec clearly explained to these fools that there are some numbers that every business owners needs to know – there is no excuse for it. It’s kind of like saying I don’t know my social security number or my birth date because I’m not a numbers kind of guy. Yes, that would be stupidity factor 6.
When asking for money from the sharks, make sure you are reasonable and not too greedy. The valuation of your company should be about 1.5 times the net income. Based on other factors, you could push argue it should be about 2X, but not much more than that. Otherwise, you’ll just have the sharks telling you that your valuation is ridiculous and will only pay you what it is actually worth. The evidence from watching the show indicates that the sharks will be more receptive to those who value their companies reasonably.
If you get an offer and there are other sharks that have not yet gone “out,” then you may want to politely ask if there are any other offers. This is fair and completely allowable unless you get a rude shark (e.g., Mark Cuban) who requires that you give him a response immediately. In that case, you will need to decide if his offer is reasonable and you feel he is the right shark for you.
Never walk into the shark tank feeling like you have to make a deal. If you do, they will notice and can take advantage of you. If you get a lousy offer (e.g., from Kevin O’Leary), immediately let him know that you can’t do the deal (but also be polite about it). That will send a message that you too are serious and do not have anything to lose. It will make you more appealing to the other sharks.
When you do get a deal that you think is a good one from a shark that you would like to work with, then you should just go for it. While it’s possible to get a better deal from the other sharks, it could also be dangerous to try to wait for them to provide bids. So, just go for it if you get a good deal.
No matter what happens, always be polite and give off a sense of humbleness. While you shouldn’t call them by their last names (e.g., Mr. O’Leary, Ms. Corcoran, etc.), you should always reply to them by calling them “sir” or “ma’am.” This will help to make the sharks feel better about themselves. Remember: people with a lot of money have big egos. So, stroke them whenever you can.
Don’t be too sensitive, especially at what Kevin O’Leary says. Just stay calm and collected. Even if you don’t get a deal, you’ll still benefit from the publicity. Also, be polite in the exit interview. Remember, there are millions of people watching and it is much more important to be gracious. Otherwise, you’ll feel like a jackass later when you watch yourself on TV.
Finally, be prepared to be in the shark tank for more than an hour. While the quickest deals can take only 15-20 minutes, the longer ones could take well over an hour. The 10 minutes we see of each entrepreneur on TV is a carefully edited version that is indicative of the actual time. So, get a good night’s sleep and be well rested before you go on the show. You’ll need both the mental and physical stamina to endure your time in the shark tank.
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May 11th, 2012 @ 11:27 PM
Nice list. I agree with all you’ve said. Does anyone know how to actually get on the show?