The Sharktank Is The Greatest Business TV Show
There have been a number of small business television shows in recent history. With the rise of the entrepreneur and the decline of the corporate career, small businesses are exploding in number. More people work for a small business than a large business. So, it only makes sense that television shows are beginning to cater to that demographic- those who have or desire to have their own business.
This is the first season of the Sharktank on ABC, were entrepreneurs bring their businesses before a panel of venture capitalists for funding. If any of the venture capitalists like what they see, they will negotiate with the entrepreneur for terms. Should multiple members like what they see, they will compete or build on-the-fly coalitions to fund a project.
What is great about the Sharktank is the show provides a quick glimpse into all aspects of business- marketing, capital, operations, legal, etc. The Sharktank venture capitalists examine the entrepreneur about various aspects of the business to gauge their interest. These examinations ask about sales, profits, operations, distribution, legal matters, or marketing. This really gives the audience a quick glimpse into the real business world.
This is opposed to other business shows that fail to give a full sampling of what is involved in business. The most successful of shows is The Apprentice, which does not show much of business except for marketing. The most well-rounded of seasons was season one, but success of the show brought reality show drama and corporate branding into the projects, making the project challenges simply marketing vehicles. Oddly, the Sharktank is from the same creator as The Apprentice- Mark Burnett. Burnett has brought a very good format for the masses to see how business works or what are the most important factors of business, while being entertaining.
Here are some lessons learned from the Sharktank.
Valuation of a Company
The sharks of the Sharktank being venture capitalists definitely know how to quickly valuate a company. Brash Kevin O'Leary likes to use two times annual sales as a quick valuation formula. Before learning this I used five times annual net profit, and found both formulas generally arrive at same valuation. Except, O'Leary's is much quicker for math on the fly and the annual sales figure is easier to get than someone's net profit (which is easily falsified, intentionally or not).
As financing is what the entrepreneurs are asking from the Sharktank, the show highlights this theme. The takeaway lesson is to show those seeking financing that financiers do not want blue sky dreams. The Sharktank venture capitalists want hard numbers from a track record to base their decision on. Also, they want to know what the entrepreneur will do with the capital. Financiers do not want to see what their capital will be used for the entrepreneur's salary but do want to know the entrepreneur does have a clear idea what they will do with it. A lesson also repeated on the Sharktank is entrepreneur asking for too much, and not doing with a lesser amount.
Not Just About Money
There are times when an entrepreneur needs more than money, they need experience and connections. The Sharktank venture capitalists have shown they have very deep experience in their fields. They have shown many entrepreneurs they bring much more to the table than just deep pockets. Each has their expertise, but the licensing (Kevin O'Leary), retail and distribution (Daymond John), and television (Kevin Harrington) fields have been the most prominent experience needed on the show.Hopefully, ABC will keep the Sharktank on the air and small business owners can continue to learn.
Venture Capital Resources
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