Lessons from the "Shark Tank"
Shark Tank-When to Walk Away
“Shark Tank” is a reality television show that premiered on ABC on August 9, 2009. Each episode features a series of investment proposals from the owners/creators of a business. The presentation must request a specific sum of money from the Sharks and offer up a certain percentage ownership stake of the business in exchange. The presentation typically include a description of their service, its financial figures (current sales, profit margins, costs, etc.), the business plan and how the Sharks’ money would be used. As a result, negotiations often involve asking for a larger stake than is initially being offered. If offers are made, the entrepreneur must decide whether to accept, or decline. Here are some of the ideas that made it:
1. A gourmet food business
2. A cooking devise for basting
3. A website that resells unused gift cards
4. A fitness machine to make pushups easier
5. Lipstick mold (my wife really liked this one-did nothing for me)
Some of the ideas that didn’t make it:
1. Legal service coffee franchise
2. A gift shop for children
3. A mail-order printer ink refill service
4. A company that sells socks in three’s
5. Protective underwear for flatulence.
In many cases, thousands and thousands of dollars were spent by the entrepreneur with little or nothing to show for it. All of the Sharks’ answers are “I’ll pass”. Some of the business owners will continue to work their ideas and hopefully will use the wisdom of the Sharks to get their business rolling, but many will have their hopes and dreams vanished, even after spending more money and time with nothing to show for it. W.C. Fields quotes, “If at first you don’t succeed, try, try again. Then quit. There’s no point in being a damn fool about it.” There’s a Chinese Proverb quote: “Of all the stratagems, to know when to quit is the best”.
When I should have walked away
I had a friend who came to me and suggested that I become a sponsor for a new sports franchise that was coming to Denver—the Colorado Rapids. I really didn’t know much about soccer but he was pretty convincing that it could bring me a lot of business and opportunities. The cost was $25,000 for two years. It would allow me to have two booths at Mile High Stadium and I could get loan applications from those that attended the game. I should have questioned the time commitment, the expense, building the booths, the banners and the “give-aways”—t-shirts that said “The Official Lender of the Colorado Rapids”. With a “Quick Application” at the game, a free t-shirt was given to the prospect. I had 168 applications the first game!! I thought, “Wow, this is the most incredible way to originate loans!!” Then I started running credit reports and you guessed it, no one gave me their correct name or social security number. After running about 60 reports, I shredded the rest and had to start over with new banners that read, “Free T-Shirt with Picture ID”. I averaged four applications a game after that and only closed one loan for the two year commitment. The only thing that I received was a better understanding of soccer and a lesson that I will never repeat again.
Lessons learned from the Sharks
We as sales professionals and entrepreneurs are big thinkers. We are always thinking of ways to increase our business and profitability. When we have an idea, we need to get honest feedback from our friends, family, power partners and mastermind group. I didn’t, unfortunately and many of those who pitched their ideas to the Sharks didn’t either. Here are some of the reasons why:
1. When you are emotionally and financially involved with an idea, sometimes you can’t see the downside.
2. Spending too much time and money to make something work that will never be profitable.
3. Refusing to see when changes need to be made as no one likes changes.
4. Too proud to quit, even though you know deep down inside, you need to.
5. Putting all of your eggs in one basket.
6. Involving friends and family on an idea that isn’t proven or risky (should have listened to Pam on this one)
7. Refusing help, advice and expertise from people because of pride (If you’ve watched “Shark Tank” think of those who refuse the shark’s offer because they don’t want to give up control of their “company” for the Shark’s expertise).
If you are starting a new marketing idea make sure that you think through the up and downside of the economics, time and commitment. Get advice—don’t let pride get in the way. Consider a mastermind group to bounce off ideas. I belong to a local “Make-It-Fly” group (go to www.make-it-fly.com to learn more) that allows me to bounce off ideas and challenges that I have in my business. Do plenty of research and for me, listen to your spouse as she tends to be always right.
To Your Success!!
Tom Ninness is Vice President/Regional Production Manager for Cherry Creek Mortgage in Denver, CO. He is also the President of Summit Champions, Inc. and creator of the “The 90 Day Journey to Your Sales Success”, a powerful 90 day action plan for the sales professional. To learn more about The Journey and Summit Champions, go to www.90dayjourney.com, www.summitchampions.com or contact Tom at email@example.com Office: 303-840-0753.