Have you watched the show Shark Tank? This is a show where new and aspiring entrepreneurs present their ideas to the sharks – five business titans who made their own dreams a reality and turned their ideas into lucrative empires.
The contestants of the show try to convince any one of the sharks to invest money in their idea. When more than one of the sharks decide they want a piece of the action, a bidding war can erupt, driving up the price of the investment. But this only happens sometimes and for a few of them.
Entrepreneurs can often face a tough road. For some entrepreneurship can be filled with failure, long hours and a constant need to impress investors. There’s also the ever present temptation to fall back on crowd sourcing websites like Kickstarter.
These rigors turn many entrepreneurs away from following through with their business idea. Almost 40 percent of entrepreneurs cite fear of failing as the reason they don’t pursue opportunities.
The future sounds bleak for entrepreneurs, but in actuality entrepreneurship is on the rise. The growing ease of information availability exposes people to stories of entrepreneurial success.
The television show Shark Tank has helped catapult entrepreneurs into the national spotlight. People enjoy watching entrepreneurship in action so much that the television show has run for 151 episodes.
Shark Tank investors listen to real pitches that result in real businesses and real investments. Since the show’s inception, investors have funded $44,215,000 in over 100 deals.
We’re taking a look at how Shark Tank lays out a formula for entrepreneurial success.
Shark Tank Formula: What’s Needed for Entrepreneurial Success
1. Look Past Failure
The fear of failure can drive away entrepreneurs in droves. Entrepreneurs must overcome this fear if they ever hope to launch a successful business.
Fear of failure seems founded, in fact, if you’re looking at the Shark Tank success rates. There’s no way to avoid that only 1 out of 17 Shark Tank ventures ever return a profit.
Those odds won’t inspire much hope. However, investors have time and time again said that looking past fear is crucial to winning.
Mark Cuban is on record as saying:
“It’s not about money or connections – it’s the willingness to outwork and outlearn everyone…and if it fails, you learn from what happened and do a better job next time.”
The best way to overcome fear of failure is through failing itself. Take the first step and fail once, twice or as many times as needed to find your success.
Failures become less scary the more you experience it. Eventually you will see failure as a necessary learning experience on the road to success.
2. Have A Complete Plan
Shark Tank investors hear countless pitches and only offer deals to a fraction of the entrepreneurs they listen to. Most pitches fail because of a lack of preparedness.
The first step in a successful business plan is to identify your market. No investor cares how amazing your product is if no market is willing to purchase it.
Next, run every single number associated with producing your product. You’ll need sales goals, manufacturing costs, expected investments etc. to win over investors. They want to know your plan is bullet proof.
It helps to consult experts like accountants and other business owners when attempting to run your numbers. They have the experience to help you make sense of your numbers.
But don’t take anyone’s advice for gospel. Only you know the ins and outs of your own business.
You don’t want to become one of the almost 50 percent of entrepreneurs who fail because they don’t heed this advice. Incompetence is the fastest avenue to failure.
3. Believe in Yourself and Your Product
Sixty-six percent of entrepreneurs say their reason for becoming entrepreneurs was to capitalize on a business plan (the money), but only eight percent of people who made pitches made them successfully.
How did the majority of people fail to convince investors of their product’s worth? It’s simple, people are fixated on the monetary gain and not belief in their product.
Entrepreneurs that pitch to investors only looking for an end profit often give up easily on their product. After all, the product is only a business plan devised to make money.
It’s imperative to believe in the long term potential of your business (and product), and look beyond immediate finances. You must truly believe that your product is a winner.
Investor Kevin O’Leary offered the owner of a tea company 250K for 35 percent ownership in the company. That amount of relinquished equity is enough to scare off many entrepreneurs.
The tea company owner believed in their product and took the deal, eventually selling the company to the CEO of Jamba Juice for one of the most lucrative deals in Shark Tank history.
Entrepreneurs looking to pitch successfully to investors need to remember the three main aspects to the Shark Tank formula: conquer fear, know your business plan and believe in your product.
If you combine these three key pieces of the Shark Tank formula, your chances of being successful skyrocket, especially if you are involving investors.
What has been your experience when starting a business? What kind of successes and failures have you experienced? Let me know in the comments below.
Nick Rojas is a self-taught, serial entrepreneur who’s enjoyed success working with and consulting for startups. Using his journalism training, Nick writes for publications such as Entrepreneur, TechCrunch, and Yahoo. He concentrates on teaching small and medium-sized enterprises on how best to manage their social media marketing and define their branding objectives.