Admittedly I am big fan of the TV program Shark Tank.
The program focuses on aspiring entrepreneurs who seek to secure investments and partnerships with one or more of the “Sharks”, billionaires and millionaires who seek to grow their fortunes by investing in companies with high growth potential.
Over time I have watched nearly every episode. In nearly all cases it’s easy to predict who will get a check and who will not.
Here are five marketing mistakes small companies make that prevent them from getting a deal on Shark Tank and, for that matter, probably anywhere else.
- Failure to construct a clear, concise business presentation.
Many of the Shark Tank contestants seek to be creative. Some downright funny. Others are extremely nervous, barely able to get the words out of their mouth.
No matter how entertaining, those who appear disorganized and unable to state their case are usually sent home without funding.
In many ways the same holds true for those seeking to build relationships at networking events, trade shows and on sales calls. They lack the approach or the skills necessary to get a prospective buyer to the “tell me more” stage of the presentation.
- Failure to know your numbers.
Entrepreneurs must know their revenue figures and be able to communicate them to the Sharks. This includes specific numbers for the last three years, last year, even last month.
Beyond the numbers they want to know why sales are increasing or decreasing, and if any major orders are pending. Perhaps there is a logical explanation of how the company will grow over time.
Lack of hard numbers will usually send the entrepreneur packing.
Those seeking funding from an investor or lending institution must have a thorough knowledge and understanding of their pro forma. Even in a selling environment prospects like to know they are doing business with a growing firm as to one heading in the wrong direction.
- Failure to know the competition.
As Shark Tank’s “Mr. Nice Guy”, Kevin O’ Leary often says “Why should I invest in you when a multi-billion dollar corporation can make the same thing and squash you like a cockroach.”
Business owners should study their competition and ensure their product or service provides them with a competitive advantage, something difficult to duplicate.
Companies lacking differentiation are usually shown the door. The same holds true in the marketplace where it can be difficult to gain share against older, more established competitors.
- Failure to understand customer acquisition.
A recurring question is, “How much does it cost for you to acquire a customer?” Some entrepreneurs know the number, some do not.
The figure of course varies depending on the type of customer (business or consumer) and length of selling cycle.
Those with unintelligible or extremely high numbers send the sharks swimming.
A business owner should study this number, make attempts to lower costs, and offer customers more competitive pricing. Adjustments can be made as needed to stay a step ahead of the competition.
- Failure to highlight strengths, hide weaknesses.
Potential “investees” often get hung up when a Shark brings up a negative but minor point.
The entrepreneur can get flustered even argumentative. Suddenly a non-issue becomes a major concern.
The discussion shifts quickly away from the product and focuses on the credibility of the individual. Fearing a personality clash the sharks shy away. What appeared to be a good investment a minute ago suddenly gets water logged.
Instead of dwelling on the negative, business owners should focus on all the positive problem solving aspects their product provides. The minor irritants can be swept away with solid facts, figures and case studies, easily demonstrating that they are a great company. Ready to swim with the sharks.