Would Shark Tank Invest In Your Business?
by Duke Romkey | on January 28, 2012
Shark Tank is a show on ABC where entrepreneurs pitch 5 established investors on why they should invest in their start-up company. The hope is then that they can take that additional equity investment and turn their business into a multimillion dollar empire. They rip apart every business opportunity to see if it is worthy of their time and money, best of all you get to see how they think.
So the question that I pose to you is, would they invest in your business?
Would You Survive The Shark Tank?
Better yet, would your business survive the Shark Tank? Here are some things you want to ask yourself about your current business or the business that you are looking at starting to help determine if you would come out alive.
1) Is there a market for your product or service?
One of the first things they look to establish on Shark Tank when determining to invest is that “is there a market?” How much is there being sold per year? How big of an industry is it?
If there is no market to sell to then what is the point of investing in that product or service?
2) What is the current demand for that product or service?
Different industries will go through cycles of growth and stagnation. What cycle is your product currently going through? Are people constantly talking about it? Is it all over the news? Are people thinking, I want more of that?
3) How new is your product/service?
People only like to buy things that are new and fresh. If it has been done over and over it just isn’t as appealing. Having something that hasn’t been done before creates a buzz around it and will get people thinking if this is what they have been waiting for? This is the reason that not many people won’t buy the previous version of a cell phone even though it’s cheaper. It has to be “NEW.”
4) Is it scalable?
Here is a question that stopped a lot of the entrepreneurs on Shark Tank cold in their tracks. By scalable, can it be mass marketed. Sure you can do it as one person now, but to make the big bucks, do you have the distribution channels in place to do it? If you have to hold all your inventory in your own house or haul it in your car to deliver to a client then you better have an awfully big house or truck if you are planning to become a millionaire.
The majority of the investors were most impressed with business that customers could go online and purchase their product and have it automatically delivered to them. Rather than physically receiving orders and handling it themselves. Online was a better solution in terms of scalability.
5) How much leverage is there?
They loved this question because you don’t get to being the big shot if there is a direct correlation between how much time you work and the amount of money that you make. Hence, none of them like to get paid hourly. As long as your revenue can continue to increase without having to work longer hours, then you have leverage.
6) Can others easily replicate it?
The Shark Tank panel asked this from the stand point of competition. How easily could someone step in and replicate your product or service? They were looking for something that could “corner a market.” Something that couldn’t be easily done by some Joe Schmoe with money.
7) How much competition is there?
More competition isn’t better in this area. Take health and wellness, how many weight loss products are there out there? When a potential customer is looking to pick something, the more competition there is then the less chance there is of them purchasing your product. They wanted a business that was either a top player in it’s market or a stranglehold.
How Did Your Business Do In The Shark Tank?
Don’t worry, it’s not the end of the world if it didn’t succeed in every category. Take what you learned from it and make those changes in your business if you are able to so that it becomes more attractive to potential investors or potential partners. This also gives you a good way to analyze business opportunities and will give you incite to how some of the well established investors make their decision. I think I may be getting hooked on watching Shark Tank because it’s free incite into the business minds of billion dollar investors.
Please Leave A Comment If You Have Watched Shark Tank Before.
Let’s Kick It Up A Notch,
|Duke Romkey, Creator
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What Will Happen To Your Business Inside The Shark Tank?