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Making the Decision to Enter the Shark Tank

Going on a TV show like Shark Tank or Dragons Den can definitely be a daunting task but as I have pitched businesses on BOTH shows (and received an investment offer from 2 Sharks), I wanted to shed some light on the whole process so you can be fully prepared, and not look like a dick!

beard hat shark tank

Applying for Shark Tank

The application process is fairly straightforward and because the information and forms are readily available online, I am not going to say too much on this, but there are some very important points to consider. When applying for any TV show, you need to know WHO you are actually applying to – by that I mean the producers, not the sharks or dragons (actually the investors have NO say on the approval of applicants and NEVER know who is coming through the door to pitch next).
The main goal of any producer is to create great content and ultimately a TV show that is entertaining above all else.   It’s worth keeping in mind that they do not care about getting you an investment, or what happens after the episode and their only objective is to make viewers laugh, cry, hate or love. What does that mean for you? … Simple! Show the producers by way of your application (and video pitch) that you have an interesting idea/product or that you are an entertaining character! During the application, do not be afraid to show off and gloat about your achievements because this is the only chance you’ll have to impress and ‘wow’ them, so take full advantage of it!  

Preparing your Shark Tank Pitch

Know your investors – Do your research about the investors so that you know what they are looking for, what connections they may have and what interests them. An easy first step is to watch the show! When I was pitching to the sharks, I had no idea who they were while applying, but within a few days I got to know everything about them including family, social media, background and even current investments. There is a lot of information online, so get into it!

Know your numbers Not knowing your numbers is the biggest mistake people can make and it takes very little time to find out. If you approach any investor with a pitch and don’t know your financials you will fail horribly, or worse – get taken advantage of! There is no excuse for not knowing your financials and if you are in need of support, seek the advice of an accountant. To make it easier on you, here are some basics that you’ll need to know:

  • Gross Sales
  • Net Profit
  • Cost of goods (The cost delivered to you, your wholesale cost and RRP)
  • Profit margin – What % of your revenue is profit.
  • Projected sales for the current year (and know how you got that projection)
  • Sales to date (current year)
  • Your current Inventory amount and the retail value of that
  • Gross sales to date by year (last 3 years)/ what was your net profit each of those years.

Remember: If something doesn’t sound right, you need to have a good explanation.. For example. If last year your sales were 100k, and your profit was small or a loss of -10k, that’s a red flag, and they will ask questions!

shark tank beard hat

 TIP: Watch the show and for each question asked, make sure you would be able to answer it!

How to determine the value of your company - This is the question that potential shark tank pitchers ask me the most. It’s hard to determine true value of anything let alone a business, but one method is to look at revenue- If the business sells $100,000 worth of goods per year, you can think of it as a $100,000 revenue stream and typically, businesses are valued at a multiple of this yearly revenue. The multiple will depend on the industry, but generally somewhere between 2-6 times earnings. Check our this handy resource.

Other factors that you may want to consider are: value of inventory and assets, debt owing (if any), and if you are about to reach a period of large growth (be it because of industry changes, new customers or large purchase orders for example).

... But what if I have no revenue?  Valuing a startup with no revenue is tricky and there is no exact formula, but over everything else, you’ll need to show value in the outcome of what your goal is – basically you need to have a plan and a good one!   When I say ‘good’ I mean a measurable and attainable goal that you can show to the investors, and one that is believable. If you can demonstrate that a return on investment is likely, then the risk is dampened and you’ll have a far better chance of receiving an investment.   Don’t get me wrong, the sharks love a bit of risk, but it must be a calculated risk!

Remember!  The value of a deal is not always about the cash you’ll receive, but the value of the connections and experience that the shark or dragon investor can bring to the table. EVERY shark or dragon investor has a lifetime of connections and tapping into those that will work best for you should be your main priority. Put simply, you are selling a share in your business in exchange for the perfect partner, not looking for a loan, or cash injection.

 Have a realistic asking price - Let’s be honest, many businesses go onto shark tank or dragons den for TV exposure and have no interest in obtaining an actual investment. The big tell? An astronomical asking price!
There is absolutely nothing wrong with using shows like Shark Tank or Dragons Den as a tool to market your product or company, but you also don’t want to look like a dick! Be realistic about the value of your company and remember, you can always turn down an offer during filming, or afterwards.

What percentage of my business should I offer the Sharks? - Remember how I said producers are only looking to make interesting TV? Well, 10% of a 100k company is not interesting! If your company is not worth over 1m and growing very fast, investors would not be interested in 10%.. it’s simply not worth their time, and the producers know this will not translate to good TV.

Producers want to hear that you are willing to offer 25-40%, they will never say it or force you to offer more than you are willing to give, but it will help you to increase your chances for getting onto the show. Don’t worry though, once you get past the gatekeepers (producers) and walk through the door to pitch, you can offer whatever you like.

What Happens at the Studio 

Congratulations on being selected and passing the mandatory psychological evaluation! You can find comfort in the fact that a professional believes that you are sane and now your day has come!
preparing for shark tank pitch
After being put through some basic hair and makeup and possibly a quick interview with the host of the show, you’ll be sent to the waiting room. This doesn’t sound like much but is arguably the hardest part of the whole process.  
Usually a day is made up of 8-10 pitches (half in morning and half after lunch) so you’ll have 4-5 other groups around you in the waiting room nervously reciting their pitch and rocking back and forth in their seats. Their stress is usually unnecessary and caused by too much preparation and the fear that they will suddenly forget their pitch. For this reason I highly suggest you rehearse, but not recite!
When it’s time, you’ll be escorted from the waiting room to the doors of the Shark Tank or Dragons Den. From here (outside the set) you can see that the epic stage you’ve seen on TV is made up of nothing more than thin wooden walls.   You’ll then be counted down from 10 and shoved into the hallway.  

TIP: After your initial introduction and pitch (up to 2 mins) the questions will be coming from all angles. The sharks will ask you what they want, when they want, so Instead of writing a long script and trying to plan the whole experience, just make notes about your best highlights, selling points and of course your financial info.

As you walk down the corridor of large televisions with sharks playing on them a cameraman with a chest-mounted camera will lead the way. The doors automatically open and you put on your bravest face as you enter the Shark Tank.   You walk to your mark on the floor (usually a small piece of tape) and stand silently for 1 minute. That’s right! … you have to stand in front of these 5 sharks while the cameras get into position, which typically takes 45 seconds – 1 minute.  Once the cameras are out of site, hidden behind their one-way mirrors or lurking in the dark, you’ll here the producer say “begin”.. and it’s showtime!

 Making your elevator pitch is the easy part and ironically it’s the part you have been most fearful of, but it will go fast and in no time you’re fielding questions like a pro! Just have fun with it!
 Although the pitches you are used to seeing are abut 5-10 minutes long, you’ll spend much longer discussing the business but most will be heavily edited. During my Dragons den pitch for example, I spent about 35 minutes total in the Den with a final edit of about 9 minutes. On Shark tank I was in there for over an hour, but the final edit was 12 minutes.

TIP: try to get in early – Not that you’ll always be given an option, but if you ask to go first or second, you may get lucky!   Your nerves will thank you too because you will not having to wait for the impending pitch as others go in front of you. Nervousness is contagious and the waiting room may have a few worry warts that will stress you out.   Filming constantly goes longer than expected, so if you are told you’ll be on at 11, it will likely be more like 1.. and that extra 2 hours sucks!  It will drain your energy, and there is a chance you will over rehearse which will take the fresh edge off your hard-earned pitch. On top of that, filming for the investors and crew is intensive and lasts for weeks, so they get over it pretty quick!   Everyone seems to be happiest in the morning. Right before lunch tempers may be at their peak and after lunch energy levels are down. 

After your Shark Tank Pitch

Congrats, because you’ve officially been tossed in with dragons or sharks and (most likely) lived to tell about it…. But don’t get too excited because per your contract you can’t actually talk about it! Unless you secured a deal, you won’t likely ever see the sharks or dragons again and you’ll have to wait several months until the episode is aired. If you did secure a deal, you’ll be contacted by the sharks or Dragons and will have to meet with them to undergo contract signing and due diligence. Things may change at this point, including your deal, so be prepared. How many Shark tank deals fall through? It’s estimated about half of the deals you see made on the show actually get through to signing, and on Dragons Den, it’s been estimated to be less, at about 25%!

Time for your Shark Tank Episode to Air!

Once you know your pitch will be aired, you need to prepare! This is your chance to increase your exposure to the max and gain as many new fans and customers as possible. The first thing you need to do is make sure your site doesn’t crash. You’ll need to make sure your server can handle at least 75,000 concurrent connections. My personal tip: if you are not already using Shopify, make the switch!

Advertising

Contact your local news and newspapers to get extra free publicity. Every media outlet love a local story and your community will be talking!  Some other useful marketing tools will be Facebook and Retargeting options that will let you advertise to the tv show fans directly and even retarget all the visitors that visited you, but did not buy. You can consider a special offer or discount if you really wanted to.  Also you may want to consider placing google search ads for the week after your episode airs.

How much will I sell? - Inventory levels - make sure you have enough! I can’t stress this enough. The actual sales made from a shark tank episode going to air varies but it’s not uncommon to have a thousands, or even tens of thousands in sales after your episode airs. It depends on a number of factors, but if your product is a gift under $100, you can expect to do very well!

Capture emails – Be setup to capture as many emails as possible and grow your subscriber base. You may want to put a popup on your home screen, or offer 10% off for new subscribers. The more emails you can collect now, the more potential customers you can directly contact later!

Lots to do! - Be prepared for a lot of contact on the night! I didn’t get to see the last part of my episode because I was answering emails as soon as they came in. This was so that the first contact with our company was an excellent one!   This also goes for social media too- you will no doubt receive lots of messages, followers, well wishers and probably some haters too. Be setup to reply right away and keep your fans as active as possible. You can also pre-schedule your social media posts to help take off the pressure – after all you will have a lot going on that night with 3 airings of your episode! Oh – you didn’t know that? Yes, your episode will air 3 times on the same night due to different national feeds! That means you’ll receive 3 spikes in traffic an hour apart. Get the coffee out because it’s going to be a long night for you!

When you’re hot, you’re hot!

Even if you didn’t strike a deal on shark tank, you’ll receive plenty of offers from private investors after the show goes to air. This will be on top of the newly interested wholesalers, radio, tv shows and even events that want to have you as guest speaker! It’s all very nice and humbling, but don’t get too caught up in it because that will only last a short time! So take full advantage on everything you are offered.

Repeats are your best friend. Something you don’t hear about much is the repeated episodes. This is great because you’ll have a little mini spike in sales and traffic and at first you won’t know why. It could be months or years later, but is always awesome and you can relive the thrill all over again! My Dragons Den episode has gone into syndication and I am lucky to say that it has aired over 8 times! My Shark Tank Episode is newer, but has still repeated 3 times.

TIP: You may be asked by the network to sell them some product at wholesale cost so that they can have it listed on their website at the time of airing. I would suggest that you do not do this for the fact that once people see the episode they will end up on your site anyway. By selling to the network you are really just giving away your profits to them!

In the End, it's all good!

No matter the outcome of your pitch, just remember that it's all good. Good for your business by getting massive exposure, and good for you for trying new things and putting yourself out there.  At the end of it you will know more about yourself, your business and that's never a bad thing.

Lately I have been mentoring and preparing a number of individuals and companies as they set to take on the shark investors of Shark Tank.   Whether you are pitching beard hats on Shark Tank or pizza on Dragons Den, you need to be prepared.   Feel free to email me if you are in need of some mentoring.

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