Written with love by the editorial team at Fueled, an award winning Android application design agency.
The hit reality show 'Shark Tank' offers a fascinating glimpse of a do-or-die drama as entrepreneurs attempt to hook a venture capitalist. Even though most entrepreneurs don't make their funding pitch in front of the cameras, the thrashing that goes on in that tank can actually add some clarity to what are murky waters for many. Here are five vital lessons that any entrepreneur can take away from 'Shark Tank':
1) Value your business intelligently
Venture capitalists are number crunchers, and they're experts at business valuations. Before you jump into a pool of money-hungry sharks, get some sound advice about what your business is really worth. Once you have that number in your head, decide the amount of equity that you're willing to give up to an investor. Retaining as much equity as possible shouldn't be your only goal. Trading the expert advice and guidance of a shark in exchange for a larger slice of the pie can translate into 50% ownership of a success, compared to 100% equity in a failure.
2) Have a good grasp of the numbers
To be taken seriously by potential investors, it's essential that you have an accurate understanding of the financial aspects of your business. If you can't discuss your sales figures or your cost per unit without getting confused, it raises a red flag to anyone considering putting their money into your business. You should also be able to communicate that you have a clear and logical plan for the funds you're seeking. If you can't back up your plea for cash with facts and figures, don't expect a shark to take the bait you're dangling.
3) Demonstrate your passion and commitment
Sharks don't want to put their money and expertise into a hobby business, because anything less than a full-time effort on your part directly impacts their chances of getting a decent return on their investment. They want to know that you live and breathe the business, and that you have the drive and determination to succeed. True dedication and passion can overcome any number of obstacles, and sharks understand this. If they feel you're lacking either, an investor might pass on your business even if it's profitable.
4) Understand your competition and your market
When you head into a meeting with potential investors, be ready to answer questions about who your competitors are, whether there's a market for your product or concept, and how you fit into the bigger picture. Scoping out the competition and performing market research are essential early steps for any startup, and sharks are keenly aware that overlooking either can spell disaster for a young business. In order to get the funding you need, you have to show a shark that your business offers the promise of longevity and profitability.
5) Define what you're bringing to the table and then bold it
Is your concept one-of-a-kind? Is your product patented? Sometimes, investors are sold on a concept or product, but occasionally, they'll see something in an entrepreneur that convinces them to invest even if the numbers aren't quite there yet. Before you look for funding, figure out exactly where your strengths lie, and put all you have into emphasizing them.
Are you an entrepreneur who's looking for investors to help catapult your startup to the next level? What lessons and strategies have you gleaned from watching the weekly feeding frenzy?
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