During the brief fleeting time when The Apprentice used to be great, it was about business. Reality television, at its core, is typically about showcasing some type of conflict. Most often that conflict comes from relationships and unrealistic portrayals of “real people” acting badly, hornily or greedily. So when I first watched Shark Tank – another reality show supposedly about business where entrepreneurs compete to get funding from already wealthy businesspeople (the “sharks” willing to invest their own money), I was ready for the worst.
So far, the show has been pleasantly surprising and educational for any business person or entrepreneur interested in taking their idea to the next stage, including ideas like a “turbobaster” and a guitar that folds. Here are just a few of the essential business lessons that I noted after watching just one episode:
- Know what your business is worth. The most important thing any contestant on the show can do is to have a clear idea of what their business and market is worth. Valuing your company wrong (either over or under estimating) is mistake most of the early contestants seem to be making – and mirrors a mistake many entrepreneurs make in real life.
- Make an offer to establish your position. There are different points of view on how best to negotiate, but the format of the show that I find myself liking is that contestants must state as soon as they walk in the door what offer they are making, how much they want and what equity they will give. If only real business worked this smoothly.
- Focus on what’s in it for the other guy. When you walk into a situation to ask for money, it’s obvious that the person you are asking can help you. But what is in it for them? The better the answer to this question, the more likely a contestant on the show is to get the funding he or she is seeking.
- Decide what you are willing to accept. There is a difference between what you ask for and what you are willing to take. Knowing what you really want and what you can live with is crucial to any negotiation and is proving to be an important lesson that the contestants on the show are forgetting with surprising regularity.
- Prove the value instead of describing it. Similar to a point I made about infomercials in an earlier blog post, the power of a product is often best unlocked through a live demonstration. Most of the contestants were asked to illustrate what their product could do, and the value of it was directly related to whether or not they could do it.
- Create a bidding war. The last important point I took away from the show is that if you have something really valuable, it helps to create a bidding war. Too many times, businesses go for the first offer they can get, which can be a major limiting mistake.
Based on the sad history of reality television, there are still plenty of ways the producers can lose their focus and turn this show into just another extended conflict infested piece of noise. But going on the small glimmer of hope that it remains about business and real entrepreneurs selling their big idea, it’s going to be an essential watch for anyone who has ever dreamt big and thought about becoming an entrepreneur to pursue their dream.