I assume you know what Shark Tank is, but just in case you don’t own a TV or hate reality television, let me briefly explain. In this show, entrepreneurs present their business briefly to five experienced investors in the hopes of getting an investment and the investors pepper the business owners with questions about why they should invest.
Of course, it’s a TV show so you can’t believe everything you see. We’ve had several CapForge clients go on the show over the years, including one I spent a good amount of time helping to prep. She was able to get a commitment for money on the show, but after the fact it never materialized, something that happens quite often.
For the entrepreneur I think the benefit of the show is more the exposure it can bring you and the prep it forces you to do (or it should be forcing you to do at least!) to be ready to answer the questions rather than the actual cash you may raise.
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The thing is of course you don’t actually have to go on the show at all to be able to think about what you would say if you did go on.
Asking these questions and pretending that you need to have good answers is actually a great exercise because although the show is heavily biased toward being entertaining, the questions they ask are actually good things to think about!
If you can feel confident you could answer all these questions in a way that the investors would find compelling then that’s a great sign your business is in good shape and you’ve got a good handle on your business.
On the flip side, if you have no idea how to answer a lot of these questions then that’s a sign you probably should start giving them some thought and get to know your business better.
Even if you aren’t in a position to need to raise money, knowing you have solid answers to these questions is a great indicator you’re thinking about your own business in a productive and growth oriented way.
So what are these questions you should be thinking about? Glad you asked- here you go!
Questions You Should be Ready to Answer About Your Business (Even if You Aren’t About to Swim with the Sharks!)
Shark Tank entrepreneurs face a variety of questions, primarily focusing on the business’s financial performance, market positioning, and the entrepreneur’s vision. Key areas include sales figures, competition, funding needs, and the entrepreneur’s unique value proposition. Questions about valuation, market size, and scaling plans are also common.
Here’s a more detailed breakdown of common question categories and the kinds of questions they get:
Financial Performance & Valuation:
Sales and Revenue: Questions regarding past and projected sales, revenue growth, and how sales are generated are frequent.
Profitability: Sharks will inquire about profit margins, cost of goods, and the business’ financial health.
Valuation: Entrepreneurs must be able to justify their company’s valuation and how it’s determined. Even if you aren’t selling or raising money, it’s helpful to know how much your business is worth and what factors make that number go up or down.
Debt and Inventory: Sharks want to understand the business’ debt situation and inventory management.
Customer Acquisition Cost: Understanding the cost of acquiring and retaining customers is important.
Market & Competition:
Problem Solving: Entrepreneurs need to clearly articulate what problem their product or service solves.
Target Market: Describing the target audience and their needs is crucial.
Competitive Advantage: Highlighting what makes the business unique and different from competitors is key.
Market Size and Potential: Demonstrating the size of the market and its growth potential is important.
Entrepreneur & Team:
Background and Experience: Sharks are interested in the entrepreneur’s background, skills, and experience.
Team: The team’s expertise and how they complement each other are important.
Motivation: Entrepreneurs should be able to explain why they chose this particular business and what drives them.
Vision and Future Plans: The entrepreneur’s long-term vision for the business and its growth plans are crucial.
Product & Intellectual Property:
Proprietary Technology: Questions about patents, trademarks, and other intellectual property are common. Not every business has patents but every business should have processes, procedures and ways of doing things that make them efficient and competitive in their market.
Manufacturing: Information about where and how the product is made is important.
Scaling and Production: Entrepreneurs need to have a plan for scaling production and meeting increasing demand.
Other Important Questions:
Marketing Strategy: How the business plans to reach and acquire customers.
Exit Strategy: What potential exit strategies are in place.
Risk Assessment: Acknowledging potential risks and how they will be addressed.
Even if you have no plans to ever be on Shark Tank or to raise money, these are great questions to ask yourself about your business and where you are taking it and what is keeping you from getting to where you want to be.
If you can nail these questions easily, great! If you are struggling with even the basic ones, then it may be time to do some work- this can only help you and your business improve and it doesn’t take long and it isn’t hard. If you have questions or need help with this exercise, just let me know! I love this stuff and am happy to help!