PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

“Shark Tank” Still Worth Watching – Especially for Budding Entrepreneurs

By at 28 September, 2017, 10:36 pm

by Raymond J. Keating-

ABC’s “Shark Tank” kicks off its ninth season with a two-hour premiere on Sunday night, October 1st. People thinking about starting up and/or running their own businesses should tune in. Even entrepreneurs and small business owners currently running a business can learn a lot, especially if they are “stuck” or want to take their business to the next level.

As described on the ABC website, “The Sharks are billionaire Mark Cuban, owner and chairman of AXS TV and outspoken owner of the 2011 NBA champion Dallas Mavericks, real estate mogul Barbara Corcoran, ‘Queen of QVC’ Lori Greiner, technology innovator Robert Herjavec, fashion and branding expert Daymond John, and venture capitalist Kevin O’Leary,” also known as Mr. Wonderful.

The basic premise of the show is that entrepreneurs stand before the Sharks looking for funding for their businesses. They make a pitch in a very short period of time, and then field assorted questions from these potential investors. Of course, it often gets pretty tough in the Tank.

But given that this is just a form of reality television, why should anyone serious about starting a business watch? Quite simply, “Shark Tank” hits on some critical points that small business owners need to keep in mind, especially early in the entrepreneurial process, when seeking financing.

The overall experience in the Tank lines up with key points included in a business plan, such as the description of the product or service, the market, the competition, financials, growth strategy, and so on. What stands out, however, are several recurring questions from or issues raised by the Sharks.

First, and most obvious, these investors want the details on the product; how it benefits customers; and how it differs from what’s already in the marketplace.

Second, the Sharks want to know who the owners and operators of the business are.

This combination lines up with what most investors look for, that is, they invest in both the product and the people. In fact, it’s been fascinating to note how many times over the first eight seasons, Sharks will acknowledge that they like and see potential in a product, but will not invest due a lack of confidence in the business owner. Or, on the flip side, there even have been some cases where doubt lingered about the product, but a Shark made the investment due to being impressed by the particular entrepreneur.

Third, the question of intellectual property comes up on a regular basis on “Shark Tank.” Quite simply, does the entrepreneur have a patent or not? This is a big issue when it comes a business being able to secure investments or credit, and funders being able to get a return on their money.

Fourth, many of the stories served up by the entrepreneurs entering the Tank can be both inspirational and infectious. That is, they show the roles played by creativity, innovation and hard work in the process of starting up and operating a business. Their stories and ideas can serve motivate or influence other entrepreneurs.

Finally, in the end, “Shark Tank” comes down to dealing with one of the biggest obstacles to businesses starting up and growing. That is, finding funding. Time after time on the show, one hears from entrepreneurs who used their own funds or dollars from family members to get started, and now they need to find additional funding to grow, to take the next step or leap forward. That’s the process for seemingly countless entrepreneurs.

When I taught MBA students, I told them that “Shark Tank” served as an entertaining microcosm of the business funding process. I say the same thing today to budding entrepreneurs. You might be surprised by some of the insights you can gain from a reality TV show called “Shark Tank.”

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

 

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