By Chris Mennel Millions of people have tuned into ABC’s “Shark Tank” to see whether amateur and experienced entrepreneurs can land a deal with one of the millionaire or billionaire sharks. We may watch for the entertainment value; but after 7 seasons, there are real-life lessons to be learned. In fact, selling ownership in a company isn’t much different than pitching an idea to a new program partner, potential donor, or board of directors. To be effective, you have to know your numbers, be direct, and exude passion.
Here are 6 important lessons that Shark Tank negotiations have taught:
- Know your numbers. Your accountant may be the one crunching the numbers, but it’s up to your executive team to know things like revenue for the year, how much cash is in reserve, how money has been spent, what is the cost for new customer/donor acquisitions, etc.
- Shoot straight and to the point. Be up front with what you want, first, and then provide details. If you provide too much background in the beginning, you may lose your audience. Ideal leaders are organized in their thoughts and don’t ramble endlessly.
- Sometimes acting goofy may get the sharks’ attention, but may not work so well when outside “the tank”. You want to show enthusiasm, but in moderation. Take the ALS Ice Bucket Challenge for instance. They created a fun idea to raise awareness, but stopped short of making it a joke. Be creative without going overboard.
- Show your dedication to your company/organization. The sharks want to be reassured that you’re spending 100% of your time devoted to the cause. A good cause is more attractive to a donor if they can see that the staff is passionate about its mission.
- Staying focused on your mission is important, but other good causes can be selling points, too. If your organization has gone green or you have a tie in to an indirect cause, talk it up. Customers and vendors may prefer to do business with you if all other things are equal and they are deciding between two organizations. We have several clients that have touted their green business practices and seen benefits from it.
- Be open-minded with how much equity you can offer. For those in a for-profit setting, giving up significant equity for any amount of cash can seem counterintuitive if you believe you have a great product that could take off. However, transferring even 50% of your equity could be worthwhile if the company’s value will more than double with the addition of an experienced, well connected and knowledgeable investor. We encourage our clients to build value. Sometimes adding the right investor can do just that.
No matter what you’re pitching: a break-through product, a new program or a new investment opportunity, take a lead from the sharks. Put your best foot forward, be prepared and know your stuff. It’ll give you the best shot at closing the deal.
To find out how Alerding CPA Group may assist with your next program or venture, contact us at 317-569-4181 or visit our website www.alerdingcpagroup.com.
This post was written by:
Christopher Mennel, CPA
Chris oversees audit and accounting services, not-for-profit and consulting services. Chris’ specialties include manufacturing, distribution/wholesale, retail, health and welfare, service and civic organizations. Chris also prepares financial statement projections and other financial analyses.
See Christopher Mennel’s Full Bio ►