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10 things every entrepreneur should know before going on 'Shark Tank'
("Shark Tank"/ABC) Taaluma Totes cofounder Alley Heffern presents to the Sharks, with Kevin O'Leary, Lori Greiner, and Robert Herjavec pictured. Outside of ABC's "Shark Tank" or one of its international affiliates, entrepreneurs are not going to find themselves pitching their company to a panel of five charismatic investors competing against each other.
And while that made-for-TV situation may be unique, the principles for what makes a "Shark Tank" pitch successful apply to any more traditional setting, as well.
Author Michael Parrish DuDell asked the executive producers of "Shark Tank," Mark Burnett and Clay Newbill, what every entrepreneur should know before walking into the Tank and settled on 10 tips included in his book "Shark Tank Jump Start Your Business: How to Launch and Grow a Business from Concept to Cash."
We're explaining them below with additional insight from the Sharks themselves and other experts.
1. Clearly and succinctly explain what your business is.
Though a segment on the show lasts around 10 minutes, entrepreneurs typically spend about an hour with the investors. But they have under two minutes to hook the Sharks, investor Kevin O'Leary says.
You need to articulate that there's a problem your company is solving, and that there is an opportunity for an investor to make a ton of money after it shortly scales in size. You need to instill a "fear of missing out," as renowned Silicon Valley investor Chris Sacca puts it.
"If you look at the common thread in all of the companies that got financed...," O'Leary says, they're all "able to articulate the opportunity in 90 seconds or less."
2. Know your numbers.
O'Leary says that he's seen countless pitches fall apart as soon as an entrepreneur is asked about revenues, expenses, profits, manufacturing costs, projections, and everything in between.
"If you don't understand your basic numbers, you're going to fail," investor Robert Herjavec says.
3. Research each of the Sharks.
"Do your homework and uncover everything you can about each of their personal and professional histories," DuDell writes. "The more information you have, the more targeted your pitch can be."
Knowing, for example, that investors Mark Cuban and Robert Herjavec are both extremely well-versed in tech development and prefer coaching to a hands-on approach to their investments, while Daymond John and Lori Greiner are retail experts who enjoy working directly on product and packaging design, can help you tailor your pitch to an ideal partner.
4. Prepare for all the potential questions you can think of.
Each of the Sharks have told us how much they admire entrepreneurs who can roll with the punches, and don't flinch at the most difficult questions.
Barbara Corcoran tells us that in six seasons of "Shark Tank," the best pitch she's seen has been from Cousins Maine Lobster cofounders Sabin Lomac and Jim Tselikis.
"They were smart enough before they came on 'Shark Tank' — I haven't seen it before and I haven't seen it since — they watched all four seasons of 'Shark Tank' before they came on," Corcoran says. "They role-played. They worked on every objection any Shark had ever asked an entrepreneur. Reams of paper. And they practiced the answers."
5. Be honest.
DuDell writes that being a conniving salesman is a guaranteed path to failure with the investors.
"If you don't have an answer to a particular question, it's better to be truthful and look unprepared than it is to make something up," he writes. "Don't forget, there's a lengthy due diligence process once the deal is made."
(Paul A. Hebert/Getty) The full cast of investors. From left to right: Kevin O'Leary, Barbara Corcoran, Daymond John, Lori Greiner, Robert Herjavec, and Mark Cuban. 6. Explain your growth plan.
A great product is not enough to win an investor over. An investment in a business isn't an act of charity, O'Leary explains, and investors need to know how exactly their money is going to make them even more.
While not every successful "Shark Tank" product has to be revolutionary, Cuban says that the best thing an entrepreneur can do to grab his attention is to have an "operating company that has started to get real traction in a new industry that has a ton of upside."
7. Point out your weaknesses.
Every business has a weakness, and if you pretend it doesn't exist, the investors will discover it and use it against you, DuDell writes. You can, however, embrace your weaknesses and failures in a strategic way.
It's related to honesty, John explains. "Tell me about the problems as much as you tell about the opportunities, and how you may have solved some of the problems," the Shark says.
8. Communicate why you are uniquely qualified to run the business and why it's better than the competition.
"We're not investing in companies," John says, "we're investing in people. There's nothing that we've seen, that you will ever see, that is brand new. It's always going to be a new form of delivery or a new angle on it."
The investors are looking for someone who is not disposable, at the head of a company that has a "compelling differentiator," DuDell writes. "What you must prove is that there's something special that sets your business apart."
9. Be confident.
"From the moment you walk into the room, be cognizant of how you're presenting yourself," DuDell writes.
Before giving your pitch, practice effective public speaking techniques, utilizing body language and voice inflection to engage the investors. And let your personality shine through.
Joshua Rinaldi, the president of the public speaking club, New York Toastmasters, says that the fear of presenting in front of an audience dissipates with consistent practice.
10. Be appreciative.
Whether you get a deal or not, be appreciative and grateful, DuDell writes. You'll eventually be in front of 10 million prime time viewers and have a shot at gaining a high-profile, well-networked investor onto your side.
O'Leary says that "the entrepreneur is standing in a very valuable spot when they're presenting," and he gets tremendously frustrated if they don't show this appreciation by being prepared and respectful.
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