Shark Tank is a brilliant show and a favorite here at Casepops. The program provides the opportunity for inventors and entrepreneurs to find investors for their product. They pitch their idea, ask for funding, and in exchange offer a percentage of their company. If the panel of investors, or "Sharks," like your idea and business strategy, they will invest using their own money. This, in turn, can start a bidding war between the Sharks as a "feeding frenzy" begins. What could be better for a new product?
To say we've learned a lot from this show would be an understatement! To us, Shark Tank demonstrates that the people behind a product are almost, if not more important than the product they create. After all, plunging in to a shark tank requires confidence! In this game, self confidence can carry a product much further than you might initially expect. If you prove that your product has a heart behind it, it's much more likely it will be sought out by eager investors.
So, before the feeding frenzy gets started, let's meet the Sharks.
Mark Cuban- a self-made billionaire entrepreneur and owner of the 2011 NBA champions, the Dallas Mavericks. If you want inspiration, read Mark's first published book: How to Win at the Sport of Business.
Now, with these impressive entrepreneurs, it's easy to see how you might feel overwhelmed. But with these tips, we can teach you how to swim with the sharks, not become chum.
This is key. You need to show why your product is better than any other in that market. Is it high quality? Does it do something new? Show the value of what you're introducing!
These people aren’t your friends. You can’t be coy; this is business. How much have you sold? This is usually the first question they ask after the product has been explained. Do you have orders back-logged? How much does your product cost to make? How much have you grossed? You need to answer these questions not only to demonstrate your products value and your value as potential partner.
You need to have propriety on your product. Nothing makes a shark and other potential investors more comfortable than having the piece of mind that comes with a product being legally protected. This doesn’t just add value, but solidifies it.
This ties all the other points together. During your pitch you need to offer a percentage of your company for the investment you’re seeking. You need to be honest about the potential earnings your product can actually bring in; being sentimental about your product doesn’t have value in the real world.
The sharks are brilliant and they not only bring money to the table but knowledge and resources. The Sharks have connections and know how to build and grow a business. They have a value, so consider that if they want to renegotiate your initial offer.
Who would think you could actually learn something from Reality TV? You can if you are watching Shark Tank! We, ourselves, are a startup and feel confident that our fascination with Shark Tank has taught us something along the way! On the great blog, Shark Tank Success Stories, we are reminded of the companies that owe their current success to the foresight of the show's expert judges. Companies like Mr. Tod's Pie Factory and AVA the Elephant prove that taking advice and money from the Sharks can result in truly successful products. But, it's not all about the Sharks. Entrepreneurs that succeed on Shark Tank succeed not only because of monetary investment, but because they came to the table with a strong business or product concept, they demonstrated their passion for the product, and they were able to learn from the Sharks' previous experience.
Hopefully these tips have inspired you to take a chance and swim with the sharks. In our case, we've only become more passionate about our unique business prospect, and would be proud to present it to the Sharks given the chance!
We wanted to share a checklist based on our experiences for people who are interested in pursing their own startup (we should also provide a therapist's number or a meditation "how to" book because you may need it).
Believing In Yourself And Your Idea - The Little Engine That Could meets people that bungee jump or sky dive aka: people that have guts!
Before you can even think about leaving your job, which we know sounds great, you need to believe in yourself and your idea. Tell your immediate family members and see what type of response you get. If everyone isn't throwing a party like you are, it doesn't mean it's a bad idea. They could be acting overly cautious because it's a HUGE undertaking that is unfamiliar for a lot of people.
While believing in yourself is important it’s equally important to start saving money! Cancel your fancy cable, stick with your old car (or get rid of it if you don’t need it) and simplify your life and your goals. Starting up is a lifestyle change and requires persistence, time and a lot of energy. If you need to keep your day job, does your work contract have clauses about ownership of ideas or works you do at home (many do)? Are you allowed to work in the same industry without it becoming a conflict of interest? How many hours per day can you realistically work on your startup to get it to market in time? Ask yourself these questions and check with a lawyer if you’re starting up in a similar space to a previous or current employer.
Prototype - Arts and crafts for adults
The last thing you ever want to do is take your idea to one of those 1-800 INVENTION hotlines because they’ll probably take your idea and give you 5% in return. Daedalus is the Industrial design firm in Pittsburgh we hired to create our functional prototypes. They are not in the business of spending peoples retirement funds to design products they don't believe in. Before our initial visit we got our hands messy attempting to create our own prototype. Honestly they turned out better than we expected and when the President of Daedalus examined our prototype and remarked: “I’m in, I think this is great!” we knew we had something special. If you want to learn about prototyping click this link. It’s incredible how much of an impact a physical prototype has over a drawing. Making the prototype made it more apparent that we were solving a problem within a large market (Shark Tank talk). This gave us confidence in our idea and we were ready to go!
Writing a Business Plan - Crying in front of the computer and feeling like you have an MBA
To those who have written a business plan, you know how tough this can be (you should get a prize when you finish : candy, money, a gold star.. something!!). First you should do market research to find out if your product has potential in the marketplace. Market research doesn’t have to just be excessive Googling. Talk to people in the industry or prospective customers and get feedback. Tools like Fluid Surveys make it easy to get feedback from a large audience. Look at your competition, what are they doing wrong? What are their secrets that have made them so successful? Don’t be afraid to investigate thoroughly. Next you should figure out a rough estimate of the capital needed to start. Remember to grossly overestimate these costs to be realistic of problems or other costs that will arise.
DO NOT START A BUSINESS WITHOUT WRITING A BUSINESS PLAN! Investors and anyone else interested in your business will constantly be asking you about the numbers and plan, so you should know this information very well. If you need help, check out these great resources offered by score.org. That link will provide you with all types of great business plan templates. A book that will be very helpful is The Lean Startup which comes highly recommended from many big names in the startup world. Another great book to read that's crowd sourced from various startups is The Coolest Startups in America.
Contacts and Connections - We're not talking about Match.com!
If you don’t have any, go find some. Facebook friends, Twitter friends, Myspace friends, Pintrest peeps, yoga pals, your dentist or even the neighbor. You’ll be surprised at how much knowledge and advice will be available to you when you just ask for help! Remember Johnny, the kid who chewed with his mouth open at the lunch table? He might be the VP at an amazing marketing firm that could now offer you advice. Do your research and pay attention to your social channels such as Linkedin, Facebook, Twitter, and Youtube. We owe a lot to the family and friends that have helped us along the way.
Developing a Team - It's not as easy as pickup basketball!
Developers, designers, and savvy marketers are very important in today’s start-up culture. You can’t have a successful company without the right teammates. Since many companies don’t have much start up capital they will give equity to key individuals to get their project rolling. Rolling solo is not highly recommended because you'll never be able to handle all the tasks necessary for a launch. When considering partners, look for people who bring different skill sets to the table because this will make your team much stronger.
You'll need adequate time to source the right people because it’s not an easy task. A good way to interview is called behavioral interviewing. Make a list of 5-6 skills you want your candidate to have. When interviewing go through each of the skills and ask questions like, “Tell me about a time you used Ruby on Rails to make an e-commerce site” or “Give me an example of how you used Google Adwords to improve sales.” You’ll be able to very clearly tell whether someone has extensive experience in an area you need and if they’re enthusiastic about the projects they worked on. Make sure you interview as many people as it takes for you to feel comfortable.
Finally, If you’re starting an online website or service learn how to code, at least partially. If you don’t know how to code or aren’t at least willing to get your feet a little wet, your website will never come to fruition. There are loads of amazing Ecommerce solutions in the market, but you'll most likely be forced to code at some point. A few popular solutions are: Volusion, Magento, and Shopify. Unless you are a talented designer or business person who has previous experience with startups or detailed knowledge of the industry it will be difficult to find a coveted CTO (aka person who knows how to make a decent website or application). Learn how to code. Google is waiting.
Funding - Show me the money!
Have you ever watched the show Shark Tank (inventors that try to get funding)? One thing that you can take away from this program is if you have proven sales within a short period of time, you’re more likely to have negotiating power with angel investors or venture capitalists. With that said, funding your own startup is the best way to go. The first place to start is by asking your friends and family to invest through convertible notes. Kickstarter is another way to raise money through creating video about your product and asking for support. In exchange, you give all your supporters discounts on your product before of after it’s release. You can also try a local incubator program like the Alphalab program we have in Pittsburgh. If you can’t find funding in any of those options, your last resort is to team up with an angel investor who specializes in your field. A good place to start is Angel List. Take note, you will only have leverage with angles if you own IP!
There is so much that goes into starting up. These were only 5 things to consider for potential startups that we experienced and hope they help you! Starting up is one of the most difficult yet rewarding journeys you’ll take. Stay positive, stay focused and network like it’s your second job.