Have you ever watched the popular show, Shark Tank where budding entrepreneurs pitch their ideas, products/services to “shark” investors? It’s entertaining to watch how passionate the owners are, and to see the variety of business ideas blooming. That’s the entrepreneurial spirit that burns in many of us, and got us where we are today. But what I find really interesting is seeing how prepared, or unprepared many of the hopeful biz owners are, and how they either get what they came for (an investor), or get chomped by the sharks. Many of the Shark Tank learnings can be applied to real-life whether you’re looking for investors, or just delivering a quick pitch about your company.
1. Nail Your Pitch – Whether you’re presenting on national television, or to a party of one, you’ve got to nail your pitch. Know what your company is, what it isn’t, who it’s for, who it isn’t for and how you’re different from competitors both large and small. Work some creativity into your pitch to hook your potential investors from the get-go. Or, tell the story of your biz and how it came to be in a compelling manner – it can really make your presentation memorable. A good pitch can reel the sharks in- hook, line, and sinker.
2. Numbers Talk – One of the first questions you’ll hear from potential investors is “what are your sales?,” quickly followed by “how much debt do you have?”. These two simple questions help any investor determine if the valuation of your business is realistic. Many a Shark Tank entrepreneur has been sunk for this reason, so cross your t’s and dot your i’s when it comes to what your biz is worth. And, offer potential investors a fair shake. For example, asking for a $250k investment for a 10 percent share might not be very enticing for investors. You gotta share if you want their help. And make sure you’ve got some street cred in the form of sales, or even potential orders from a large source, which will translate into sales in the near future.
3. Don’t Pay it Forward – If you want to get sent packing immediately by any investor, ask for back pay. As in, “we’ve got 200K in debt for unpaid salaries because we didn’t pay ourselves for the first two years.” Time and time again, naive entrepreneurs get kicked to the Shark Tank curb for committing this fatal flaw. The real deal is you just might not get paid for a while. If you can’t deal with that, you might not be cut out to swim with the sharks. But, if you’re willing to draw nothing, or a small, reasonable salary, most investors get that you need to eat and keep a roof over your head.
Looking for other investor options? Check out our crowdfunding post here.
What other lessons can you share with budding entrepreneurs trying to lure investors? Share in the comments.
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