I just love the show Shark Tank, heck, I even purchased one of the cat guy’s pictures for my business! As I watch Shark Tank every Friday, I pick up on the little things that people are missing when they pitch their startup to the sharks. The objective of this post is to share how to pitch a business idea on Shark Tank TV and to any other investor. The perfect pitch can certainly help get you a deal.
For those of you who may not even watch Shark Tank: Business owners come to a panel of sharks and present their businesses in hopes to gain funding to take their idea to the next level. While you may never get your business on the show, there are many Venture Capital firms out there. A VC is usually a wealthy person who has money to invest in other individuals and businesses.
1. The Business Idea
The sharks want to know what your idea is, how it works, and what your vision is. Just keep it simple and explain what your business idea is. They will want to know what’s proprietary about your idea. Proprietary is just a fancy word for saying whether or not an idea can be easily duplicated and if it’s patented & only a finite amount of people know the information.
For example: Coca-Cola’s coke recipe & Google’s algorithm would be considered proprietary. Ideas that can be easily duplicated are usually never getting deals.
Things to share when presenting the idea:
- How you came up with the idea
- The problems the idea solves
- The ‘ideal’ consumer of your product/service
2. Demonstrate That You’re “All-in”
I loved when Mark Cuban drilled one business owner about triathlons. It was clear to him and everyone watching that this business of his was just a hobby rather than a full-time endeavor. Being “All-in” and making your business a hobby are two entirely different things.
When you’re “All-in,” your determination to succeed and work ethic is at its greatest levels. Keep in mind that VCs are investing hard cash into your business. Put yourself in their shoes: Would you invest your money in an individual who treats his business as a hobby? Most likely you wouldn’t. Many owners have walked away having to quit their jobs on the spot. They need to get a return on their money or they’ll never see that money again. And, being “All-in” demonstrates that you respect both them and their money.
The reaction that the sharks have when a business owner reports 0 or low sales is hilarious to watch. When they see this they immediately judge your “All-in” and the business idea itself. If you’re not getting sales, then you need to ask yourself this question: “Why not?!” Don’t make excuses for why you aren’t a good salesperson and why you haven’t gone out and sold your idea to the marketplace.
Do yourself a favor and market your idea. When you have a good amount of sales, you’re much more likely to get a deal from the sharks. It will bolster your credibility as a business owner.
Margins are simply the difference between how much it costs to make the product and the price you charge when it is sold. For example, let’s say you are selling widgets. A widget costs $2 to make and you sell it for $10. Your margins are $8. If your margins are low, they get turned off. However, if they love the idea, then they’ll want to get the product made elsewhere for cheaper.
Margins are extremely important and many business owners dismiss them as not important. You need cash to keep in business and without it, you’ll fail. Don’t fall into the trap of: “I want this product made in America.” That’s crap and the sharks feel the same way.
Do yourself a favor and look at every possible way of making it for cheaper. When you do so, you’ll have much better margins and the sharks will love you.
While you’re working on your perfect pitch for Shark Tank, watch this coming season as my buddy Adam rocks it.