Of all the reality TV shows that I have seen, nothing can come close to ‘Shark Tank‘ when it comes to sharpening one’s entrepreneurial and negotiation skills. It gives participating entrepreneurs an opportunity to present their business proposal before five accomplished investors (sharks) on stage and ask for an investment in return for a stake in their company or venture. Naturally, it is a tough spot to be in. Most people take away something from the show, either a check, valuable advice, or a great experience.
Here are ten things entrepreneurs should learn from the TV show ‘Shark Tank’.
10 Lessons From The TV Show Shark Tank
1 – A good product is great if it cannot be duplicated:
A product that is patented or cannot be easily duplicated easily wins the interest of the sharks. Good entrepreneurs usually have safeguards to prevent competition from coming up easily. This is essential to the long-term profitability of the business. Do everything you legally and ethically can to slow down, disadvantage or keep out the competition.
2 – Don’t reject valuable advice:
Every business negotiation is an opportunity to learn. Even if you lose the deal, don’t lose the lesson. Even when the sharks refuse your deal, they often give you their reasons, opinions and advice about the way forward for your business.
This is something that you can’t get for free, not from people as experienced as the ones at the Shark Tank. Don’t let these valuable tips get lost in the cloud of disappointment.
3 – Know your financial position inside out:
In her book, ‘Shark Tales: How I turned $1000 into a billion dollar business’, Barbara Corcoran stresses the importance of being prepared. Successful entrepreneurs are well prepared before any negotiation. The sharks usually make light of entrepreneurs who are unable to specify their exact sales or profit and instead choose to be vague, for example, a statement like, ‘My profit is between $100,000 and $ 200,000′ reflects poorly on how well you know your own business.
How can you possibly expect someone to take an informed decision from such a statement? So, know your figures well, whether you choose to disclose it or not is another issue altogether.
4 – Do your arithmetic before you enter the Shark Tank:
Make sure that the proposal you bring to the negotiation table makes sense and is something that the opposite party will consider seriously. The sharks are very good at valuing businesses and if you get this wrong, you are likely to walk out with nothing. There is no point in asking for $85,000 for a 10% stake in a company which has no sales yet or which has an unproven business model. This is like saying, ‘Heads I win, tails you lose’.
If it works out, the investor doesn’t gain much and if it turns out to be a dud, then the investor loses.
5 – Don’t underestimate the value of expertise:
In any deal, don’t just look at the money, give due value to the expertise or other benefits the deal brings you. For example, each shark has their own network and expertise which comes from them taking a stake in your company.
Think about what it will do to your sales and brand promotion. Take the example of the company M3 Girl Designs whose founder was offered $300,000 by Mark Cuban and Lori Greiner. She insisted on having Robert Herjavec also in the deal before she accepted it. She got a much better deal in the form of added expertise even though everything else remained the same.
6 – Know the people you are negotiating with:
Many people have lost deals because they tried to take the negotiation too far. Some homework on the successful deals with the sharks would have prevented this from happening.
When Mark Cuban says that he is making a final offer, it is a final offer. Try negotiating further and you lose the deal. This need not be true for everyone. So knowing the negotiation style of the people with whom you are dealing with is an advantage.
7 – Never shift your goal posts:
Mark Cuban offered one entrepreneur what he asked for, but the person tried to negotiate a better deal and eventually ended up losing it. Nobody prefers to do business with someone who keeps asking for more because the person could do that again in the future.
8 – Know the limits of what you can accept:
This is very important in any negotiation. If the experts in the Shark Tank get the idea that you are not sure of how low you can go, they will sense that there is more scope for negotiation. One entrepreneur decided to think things over before deciding to accept or refuse a deal and in the meantime the sharks lowered the offer further. The other problem is that you could end up accepting something which you would not have accepted if you knew your limits.
9 – Let them know that you have other options:
You will never come out from a negotiation with a good deal if that deal is your only option. Even the option to refuse any deal is better than having no option other than accepting whatever comes your way. This is true for any negotiation. Have other options and let the other side know about it.
10 – When you negotiate, highlight your strengths and hide your weaknesses:
The sharks are experts at finding out your weaknesses. Recheck your pitch to see if they highlight your strengths and hide your weaknesses. Any weak links in your pitch are likely to get exposed and this will put you at a disadvantage in the negotiation process. Instead, play on your strengths to gain the confidence of the opposite party.
(Video) Shark Tank – Selling An Idea To The Sharks
These are the ten most important lessons that you as an entrepreneur can learn from the ‘Shark Tank‘. The show is indeed a valuable experience for the participants and the viewers.