Have you ever dreamed of walking away from life-changing money with a smirk on your face? Then this guide is definitely for you. Welcome to “The Ultimate Guide to Failing on Shark Tank.” It’s designed for entrepreneurs who want to leave the Sharks stunned by their genius choices (not really).
We’ll show you how to create such a confusing and impractical business plan that even the most experienced Shark would back out saying, “And for those reasons, I’m out.” Get ready to learn the art of failing and turning potential deals into memorable flops. Dive in and discover how to miss out on getting rich!
15 Steps to Fail on Shark Tank
1. How to Dream Big: Overestimate Your Company’s Worth
The entrepreneur prepares for an amazing pitch but sometimes fails at Q&A sessions. Sharks inquired about the business in depth, mostly in technical terms. Many business owners fail by overvaluing their business. This leads to false data and low confidence in the business as an investor. This mostly happens when business owners do not know the core idea very well or have a hierarchy model.
For example, InvisiPlug from S5E14 overvalued their company. They valued their company at $1.25 million, which is unrealistic. Kevin said that their valuation of the company was beyond insane. Kevin and Barbara stepped out due to the overvaluation and unrealistic numbers. Potential investors like these will surely step out if they feel there is no true data.
2. The Art of Vagueness: Operating Without a Clear Business Model
Many entrepreneurs lack knowledge about the business. They begin the idea as a business without proper research regarding its success which eventually leads to bankruptcy. There are many entrepreneurs with such failures. Despite having great products, the business is about to lose its debts.
This is a big red flag that the Sharks can’t ignore because they knew that their investment would be spent in debt rather than for business. This is how companies end up with an investment spent on bad debt. For example, Rule Breaker from S12, E12 was rejected due to its bad debt. The company had over $2 million in debt; therefore, no Sharks was interested in investing in such a company.
3. Mastering the Mumble: Essential Weak Presentation Skills
Presentation or Pitch is where the entrepreneurs are in full command. It must be adequate according to the ideas and Sharks’ preferences. With a good presentation that glues the Sharks’ attention, they will proceed to the next level. Without it, neither the Sharks nor the audience would be interested in the pitch. This makes the idea uninteresting. For example, Allison DeVane from Teaspressa (S7, E20) was not clear in her presentation. She introduced multiple products that confused Sharks, and unfortunately, all Sharks were out due to this.
4. Playing Dumb: Pretending Not to Know Your Own Numbers
A business owner should know their sales figures and data. Some entrepreneurs come to pitch without proper facts. This led to mistrust in the Sharks. Without proper data and sales figures, Sharks are unable to project the growth of the business. Eventually, this led them to drop out of the deal.
No wonder how well Blinger works. It has great business growth and a good number of sales. But the CEO Angie lacks the proper valuation of her business. Mark stepped out because he thought that she did not know the proper value of her product. Potential investors like Mark will surely step out if they feel any lack of true data there.
5. How to Stubbornly Ignore Useful Feedback
After the pitch, Sharks are all set with their queries and feedback. There have been entrepreneurs who have shown resistance toward feedback, such as declining the remarks, sarcastic comebacks, etc. This shows the unprofessional behavior of the entrepreneurs, which is unacceptable to any investor. Kudo Banz from Season 10 Episode 6, the children of the entrepreneurs were at the brink of a debate with Kevin to defend their product.
6. Imaginary Success: Pitching Without Any Evidence of Concept
Some business ideas are worth the investment. However, without proper research, it is nearly impossible to project or estimate its success. A few founders of the companies came up to Shark Tank for investment without understanding the success ratio, target audience, demand number, sales figures, etc. This frustrates the Sharks for wasting a potential slot. From Season 6 Episode 7, Titin was a disaster at the concept of their business idea.
7. How to Plan for Unbelievable, Fantastical Growth Rates
Dream big! This quote comes true when you work to make it real. Living in a dreamland of success by just visualizing isn’t going to bring any good. Many entrepreneurs are so optimistic about their business ideas that they over-evaluate their sales figures. Being unrealistic with sales numbers is just fooling oneself and Sharks.
8. Pretending the Market is as Small as Your Backyard
As we discussed, lack of knowledge about the product and its market will lead to failure, waste of time, and loss of money. Some entrepreneurs believe in learning the hard way by jumping into the market without analyzing the obstacles ahead. This wastes time, money, and resources for a long time. KIN Apparel from Season 13 made this mistake. With no knowledge of the clothing industry, entrepreneurs jumped in with her brand, which made things hard to handle.
9. How to Be Less Appealing than Every Competitor
Every entrepreneur expects to reach the top of their industry. However, this highly depends on the fact that their product is different from those of their competitors. Without knowing the weak points of the competitors, launching the same product will make no difference to their success. Moreover, it will be a flop as soon as it launches. From Season 14 Episode 17, Tngnt Ski Bikes weren’t competitive and were temporarily due to snow accidents.
10. Why Bother With Customer Acquisition Strategies?
Many business owners lack technical knowledge about the business industry. The incorrect evaluation of Customer Acquisition leads to incorrect growth numbers. Eventually, Sharks steps out due to this mistake. Many small businesses quit it as they think to first grow big. However, customer acquisition or grabbing more customers is equally important as gaining profit.
HYPD from Season 15 Episode 21 is a fresh example. The entrepreneurs were good at their work and had good sales, too. But they had no ratio for customer acquisition. This made Kevin uninterested in the product, so he left the deal.
11. Stiff as a Board: The Perks of Inflexibility in Deal Negotiations
Some entrepreneurs lose a good deal due to this mistake – rigidness. A business owner seeking investment shouldn’t be hard and fast with rules during negotiation. This is why they lose a big chunk of the investment that Sharks are ready for. It’s just like Chefee from Season 15, Episode 17. Entrepreneur Assaf rejected the deal and asked to revise it. Eventually, he got the deal.
12. Underestimating Challenges: Because Surprises Are Fun
Shark Tank has seen businesses with great success and sales figures. But, they badly fail at the operational tasks. Due to weak operational management, the business faces losses. Despite popularity and sales, the business struggles to keep up with its demands. Such as Blinger from Season 15, Episode 20. This hairstyle tool was amazing at sales but lacked proper operational tasks. Luckily, they get a deal with Barbara, who offers her skills to get them organized.
13. All About the Product: Who Needs Sales Anyway?
Some businesses focus a lot on their product. That is good, but it can be bad if they only focus on the product. They fail to understand that sales are more important for the business to be alive. This leads to proper products but not a profitable business. For example, in Season 13 Episode 3, the company Sparketh founders were too much into their product. But it is a hobby, not a profitable business.
14. Why Prepare? Wing It with the Sharks’ Questions
Some entrepreneurs are too occupied with the presentation and pitch that they miss out on other points. This happens when the owners aren’t well prepared for the queries and possible questions that can be asked. When unprepared for Shark’squeries, this leads them to reject the deal. Minus Cal from Season 11 Episode 1 made this quite difficult. The pitch soon led to a state of hot debate with Mark.
15. Exit Strategy? I Thought This Was a Lifetime Commitment!
Many unprepared entrepreneurs have no plans for investing money. Sharks have seen entrepreneurs who don’t have any plan to make the most out of the investment. The majority fail to plan and structure a clear plan to return the investment. Snow in Seconds from the Season 15 Episode 8 can be a good example. Despite having a deal with Barbara, other Sharks stepped out due to the clear path to get back their investment.
Conclusion
So, that’s all for now. I hope you have thoroughly read through all the 15 steps. Our guide will help you present a well-considered and realistic business plan before appearing on Shark Tank. Understanding and avoiding these common pitfalls can significantly improve your chances of securing a deal with the Sharks. Use this guide to refine your approach, strengthen your pitch, and enhance your quick business decisions. Remember, every mistake is a learning opportunity, and each pitch is a step closer to success. Good luck, and may your next appearance on Shark Tank be a triumphant one!
Hello everyone, I’m Sara Javed. I’m an IT professional expert with project management and design skills. Besides writing, I love playing video games, designing digital art, and reading books. I love Shark Tank due to its innovative business idea and unpredicted reactions of Sharks. This keeps me glued to the screens to watch the next catchy moment. Read more About me.
