If you haven’t seen Shark Tank, it’s a reality show where entrepreneurs pitch their businesses to millionaire and billionaire investors, such as Dallas Mavericks owner Mark Cuban and the “Queen of QVC” Lori Greiner. If the investors and entrepreneurs strike a deal, the investors offer cash in exchange for an equity stake in the company. The potential investors often grill the entrepreneurs on whether or not their business is sustainable, how it’s marketed and whether or not it will stand up to the competition. While there isn’t much to learn from many reality shows, Shark Tank actually offers some valuable insights to new franchise owners. So as you look to grow your franchise and possibly expand into multiple locations, it might be a good idea to “Shark Tank Test” it. Here’s some of the typical tests contestants have to pass, and you should too:
• What are your profit margins?
It’s a simple formula for how profitable your product or service is, but an essential one to consider. How much money does it cost to produce your product or service and how much is your target consumer willing to pay to buy your product or service? The smaller your profit margin, the more units you need to sell to grow profits. Is that realistic for your business and/or market?
• Can your business be easily replicated?
Shark Tank investors are quick to attack a business that, once it takes off, can be easily duplicated by bigger competitors that typically have cost and process efficiencies versus small businesses. You need to think about
not just whether or not you’re filling a specific niche in the market, but how difficult it will be for competitors to move in on that niche once they see what you’re doing. Effective business leaders should be constantly focused on key differentiators as well as barriers to entry the market space.
• How will you market your product or service?
Your business model may be great, but how will you take your product/service to market and how will consumers
find you when they have a need for your offering. Understanding how to effectively reach your target market can make all the difference. Just because you have a website and advertiser on Google doesn’t mean consumers will find you.
• When you pitch your business, do you know your stuff?
If you’re trying to sell your services to a big client, you better be ready to answer the questions above and anything else that’s thrown at you. You’ve got to be quick on your feet, because just like on Shark Tank, you often only get a few minutes (or seconds) to make your case. One pause could cost you a deal.
• Can you sell yourself?
Great products and services are a must, but as the face of your company, you have to make people believe in you too. Often the contestants who get deals on Shark Tank are the ones who appear to have the tenacity and drive to live, sweat and breathe the business 24/7.
In business, just like in the Shark Tank, you need to be prepared.
Scott Brandt is vice president of marketing at SurePayroll, Inc. For more small business and payroll tips, visit our
blog at http://blog.surepayroll.com.