On the hit ABC show Shark Tank, contestants don’t survive the tank simply because they’re pretty…Well, maybe sometimes. But, to actually win the show and achieve startup success, you’ve got to know how to play the game. This is especially difficult when the rules of the game are very tricky and almost nonexistent. Yet, the same is true for your startup company outside of reality TV in this cutthroat business world. In order to make it, you’re going to compete against a horde of bigger sharks that have been around a lot longer than your startup has and a lot of other baby sharks in the same boat as you.
Beyond just a killer idea, it takes skill, practice, ambition, and a whole lot of patience to get ahead. You have to figure out how to get consumers to come to you, and even more importantly these days, how to get your social media accounts running to amass an army of loyal followers marketing for you. While it is important to know who to target, it is even more essential to know how. To improve your chances of startup success, the following are some savvy tips from my Shark Tank Formula to show you what every startup needs to know for survival.
1. Be Aware of the Startup Statistics
Did you know that only 186 of the 377 pitches on Shark Tank actually end with a deal? Plus, in the 93 episodes aired over the course of five seasons, just one-third of the deals made on the show actually close. What do don’t see is what happens off-camera as the contestants and their companies undergo a months-long vetting process with the Sharks. While it is clear that the Sharks are tough, it is important to be aware that the real business world of venture capitalism is even more challenging for new entrepreneurs.
In fact, just one in every 17 ventures has even seen a profit over the past two years. Although 73% of entrepreneurs report that luck is an important factor in the success of their venture, the majority of startups fail in the beginning because they simply aren’t equipped to manage the company and establish a clear business plan. Rather than be discouraged, it is crucial that you are aware of these shocking statistics to learn from the mistakes of other startups. Using my Shark Tank formula, you will have a far better chance of becoming one of the lucky startups to land an investment deal.
2. Find a Specific Target Audience for Your Product/Service
If your startup has no targeted audience that will benefit from using your product or service, then your company is virtually dead in the water. While 68% of entrepreneurs report starting their business to capitalize on a brilliant idea, 46% of them fail due to incompetence in knowing the targeted audience for their product. Rather than creating a product before finding a target, the greatest and most successful startups locate a target and then create an innovative solution that will respond to their unique needs.
3. Create a Strong Network of Investors
As seen on Shark Tank, finding a good investor is one of the most critical factors that can cause a startup company to sink or swim in today’s competitive business market. Not only does having a strong network of investors provide your company with the necessary capital needed to cover finances, but it also offers access to valuable insights and other business connections. In order to help scale your business the right way, seek out investors who share common interests, know the business well, and can help your startup grow to begin distributing large profits.
4. Stay Within Your Limits!
Since it is estimated that just 2% of all business deals occur during the first meeting with a group of potential investors, startup success is all about staying determined and not giving up after the first “no.” It is all about the pitch, the sell, and the negotiations. Not only do you need to know when the right to accept an offer is, but you also must know your negotiating limits to back down at the right time. After all, contestants on Shark Tank who take too long to accept deals, ask for more money, or step out of the room to let the Sharks swarm have a notoriously high rate of going home completely empty-handed.
5. Express Enthusiasm for Your Startup
When pitching your startup to investors, it is essential that you go beyond the mundane facts about your product or service to show the heart behind the company. The most successful entrepreneurs are able to express their enthusiasm to show investors that they are passionate about the business and are willing to weather the storm for making it to the finish line. Don’t be afraid to show your passion by personalizing your pitch with anecdotal stories that will draw investors into sharing your same passions. In addition to having the business finesse to turn a profit, you need to have a great attitude and determination to never give up.
6. Be Prepared for Anything and Everything
Since all obstacles that your startup will come up against cannot be figured into the Shark Tank formula, the final piece of advice is to remain prepared for anything and everything that can happen in the exciting world of entrepreneurship. Whether you are pitching your ideas to a prospective investor, creating a business strategy, or attending a business meeting, be over-prepared by knowing your numbers inside and out. When you are well-prepared to face the challenges through your way, you will be able to demonstrate clearly how an investor can make money from you and have the highest chance of startup success!