How Would You Do in the Shark Tank?

I saw the new show Shark Tank the other night, and found it very interesting.  Inventors and entrepreneurs would approach the shark tank, a panel of five venture capitalists, and present their business plans, hoping to negotiate an offer from one of the sharks for the money they needed in exchange for a share of ownership in the company.

It was no surprise that over-valuations ran rampant, but what I was really glad to see was the care that the sharks took in determining the percent of ownership they would accept.  It was really quite simple.  If the shark thought the concept was profitable enough and the entrepreneur had a good grasp of the critical variables that need to be controlled for the business to succeed, then the shark would accept a 50% ownership share.  If the entrepreneur did not understand their critical variables, the sharks required at least 51% ownership before they would invest.  Obviously, they wanted the controlling interest to protect their investment from the entrepreneur they were partnering with.

In the worst cases, the entrepreneur was not only lacking insight into how their own business would function, but they vigorously defended their ignorance.  In these cases, there was no middle ground for the sharks.  They either wanted nothing to do with the business, or, if the concept had enough value, they would offer to buy 100%, take it or leave it.

So, if you went in front of the shark tank today, with your current business, how would you fare?  Would the sharks be comfortable investing in your business with you calling all the shots?

Maybe they would, maybe not.  If not, it’s because you’re missing some key components that are critical to your level of profitability.  If it’s not good enough for the sharks, don’t let it be good enough for you.

Use these simple steps to gain control of the profits in your business:

1. Identify the critical variables in your business
2. Implement a system to measure those variables
3. Track those measurements
4. Use that information in your decision making