I am a BIG fan of the show Shark Tank, a show where successful entrepreneurs fight over promising start-ups, and ruthlessly chew up the unprepared. Five investors (the sharks) listen to and negotiate deals with business owners looking for financing to help start, grow, or save their business in exchange for a piece of the pie. But it’s not as easy to get a deal as one may think.
An example: When three ice cream makers first lined up in front of the Sharks to pitch their product, they generated some friendly conversation. After all, the concept of morphing together beer and America’s favorite frozen treat is bound to appeal to our inner glutton. However, when the investors started asking the entrepreneurs tough questions about their finances, the men from The Brewer’s Cow had a minor meltdown. Whether the Connecticut-based founders were the victims of calculated editing or simply unprepared, their presentation lacked a certain professionalism. The final verdict? A flurry of “I’m outs” from the Sharks.
Yes, the episodes are entertaining and no, it’s not fun to hear that the product and business that you’ve worked a long time to create is worthless (to them) but there are also some valuable lessons to be learned both as a business owner and an individual.
Most importantly – Know your numbers. This is the number one lesson from Shark Tank. Whether you’re presenting to a team of investors or simply working to grow your business, it’s critical that you understand how much cash is coming in to and going out of the business. You may have a tremendous knowledge of your industry and passion for your product, but passion only gets you so far.
Not a business owner? Knowing your numbers is also important for running your household – how much is coming in vs. how much do we spend. If your monthly expenses are greater than your monthly income, you’ll need to reassess where you are spending your money otherwise the only thing that will be going up is your credit card balance.