‘Disruption,’ ‘disruptors’ and ‘disruptive’ are words that we hear a lot in the business and entrepreneur world, but how many founders and entrepreneurs actually qualify for the label of ‘disruptor?’ Truly innovating and challenging a traditional way of doing something is disruptive, and so traditional industries typically have the most potential for disruption – i.e Read More…
5 Investment lessons from the TV show Shark Tank
Fri 6 November 2015 - 12:43 pmAdvice | Entrepreneur | Featured | Growing | Hot Tips | Investing | Opinion | Small Business | Starting | Startup | Strategy
While there are certain things that reality television shows have in common – the vast majority of them seem to keep us glued to our seats while, at the same time, make us cringe at some of the things people do or say – not all reality TV shows are created equal.
Some are little more than well-oiled publicity machines for the people they feature, others are talent competitions of the performing variety, X Factor being a current example, and yet others, such as Masterchef and The Block, manage to straddle the line between being entertaining and being educational.
Shark Tank falls into this last category. A critically-acclaimed reality show that gives budding entrepreneurs the chance to present their ideas to the “sharks in the tank” – five titans of industry who have made their own dreams a reality – in a bid to convince any one of them to invest money in their idea, the show has been credited with inspiring and reinvigorating entrepreneurship in many countries all around the world.
Here in Australia, the “sharks” are Janine Allis (Boost Juice), Steve Baxter (Internet pioneer), Andrew Banks (Talent2), John McGrath (McGrath Estate Agents) and Naomi Simson (RedBalloon). You might think entrepreneurship isn’t something that you’re interested in, but there are big investment lessons to be learned from these guys. After all, they didn’t get so successful without picking up a thing or two along the way. If you’re planning on any kind of investment at all, you could do worse than take note of these following five key points:
1. Know your numbers
If you cannot even provide the important business figures for the investment that you are planning, then how can you possibly convince a finance company or mortgage firm to loan you the money that you need?
If you’ve ever watched Shark Tank, you’ll surely remember the look of horror and embarrassment on the contestants’ faces as they get verbally mauled by the “sharks” because they couldn’t provide their venture’s net profit, fixed costs, gross profit margins and other key metrics.
Get your figures right before you plan your investment and make your pitch. Even though you might not be presenting to business moguls, that doesn’t mean you won’t need to do your homework beforehand – and it certainly doesn’t mean the person(s) sitting across from you won’t still be able to eat you for breakfast.
2. Don’t mix friends and money
On the show, Naomi Simson once recalled what she says was her worst business decision – investing in a business that was owned by a friend. Long story short, it didn’t turn out well.
If you’re looking to make an investment, whether in land, property or another business, then one of the smartest decisions you could make is to keep the finance side of things strictly, well, business. Mixing business with pleasure might be a good idea sometimes, but mixing business with family or friends? Not so much.
Avoid going to friends and family for funds; investments are risky even at the best of times, let alone in our economy’s current unpredictable state, and no matter how tempted you are, remember that your relationships are not worth putting on the line for this. If you need funding, talk to a reputable finance company or bank, hire the right people to help you crunch the numbers if necessary, and make sure you’ve gone over the figures with a fine tooth comb, remembering to list all your outgoings as well as income.
3. Get the right team in place
Real estate entrepreneur and Shark Tank regular John McGrath knows a thing or two about having the right people for the job. He is emphatic that, in his line of business particularly, the key to his success has been getting the right people involved in the investment at the right time.
For instance, you might not be able to invest all of your time and energy in getting your investment off the ground, so you need to prioritise. You might not have all the relevant skills or knowledge needed in key areas of your investment, so you need to be able to find help. This might come in the form of online resources that you can access to help you with task management, or it might also mean hiring skilled people who can support you as you undertake the investment.
Even when everything’s running smoothly, you might find it more efficient and beneficial for you to hire someone to keep an eye on things or manage the investment on your behalf, so you can free yourself up to focus on other things – your family and friends, your job or another business, or perhaps even a new investment.
3. Believe in your investment
Whatever you decide to invest in, even if it’s not necessarily something that makes every investor’s top-three list, make sure it’s something that you believe in.
The great thing about Shark Tank is how it gives ordinary people the opportunity to take their idea to the next level, no matter how far-fetched it might be. Not everyone will succeed, but then again, nothing is ever guaranteed in the world of investments.
Listen to your gut instincts – if your intuition tells you that this is something worth pursuing, then do your homework and give it your best shot. Everyone’s got to start somewhere so don’t let inexperience stop you from trying.
4. Look outside the box when it comes to investors
Investors come in many forms – you’re not restricted to just finance companies or family and friends (refer to point 2.). If you have an investment that you really believe in and you’ve got the figures to back up your belief, then it’s time to read up on investment and funding options.
Crowd funding is huge in this day and age, and depending on what you’re looking to do, it could be the right way to go. Otherwise there’s also the possibility of angel investors. Like everything else involved in investments, you need to put in the time and effort to research your options carefully, and, most importantly, always, always read the fine print at the bottom of any contract you sign.
About the author:
Harry Kalligeros is a Senior Consultant at Properties Invest Australia, a property investment services company that prides itself on its personal touch. With over 21 years’ experience in the financial services industry, coupled with 10 years in strategic property research, Harry is passionate about using his financial planning knowledge and experience to help his clients – mostly property investors and investment advisors such as accountants, financial planners and finance brokers – grow their own wealth, while reducing their risk through personalised strategic property investing.
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