The latest series of Shark Tank on Channel Ten is captivating. It features entrepreneurs pitching to a group of self-made investors (the ‘sharks’). Each pitch features an entrepreneur asking the investors to purchase a stake of their business with their own money.
The sharks are:
Janine Allis, founder of Boost Juice Bars
Andrew Banks, founder of Morgan & Banks and Talent2 International
Steve Baxter, tech entrepreneur and multimillionaire
Dr Glen Richards, founder of Greencross Vets
Naomi Simson, founder of RedBalloon
The breadth and depth of innovation amongst these entrepreneurs is impressive. But what really fascinates is the sharks’ penetrating questions.
With just a brief investigation (or so it seems on TV) the sharks clarify the opportunities and weaknesses of a business. Nothing frustrates the sharks more than an entrepreneur that doesn’t know the numbers. And regardless of whether you plan to pitch your business to investors (on TV or otherwise), it’s vital to have a detailed and depth knowledge of your financials.
Give your business the Shark Tank treatment
Appraise your business with the cool, calculating and experienced eyes of your inner shark. It can help you identify opportunities, move through challenges and seek more growth and efficiencies.
Cloud-based finance software solution Xero is the ideal tool to give you the bigger picture insights you’ll need. Whether you simply review these numbers yourself, or you’re going into a Shark Tank-style pitching situation with investors, using Xero to understand the numbers is a vital investment of your time and energy.
How to use Xero to create reports to answer typical Shark Tank style questions
Xero gives you the ability to generate complex detailed reports that give yourself or a potential investor a terrific overview of your business. Using the typical questions often posed on Shark Tank, you can use Xero to create the reports to see the answers for yourself. Of course, this is just a snapshot of what you can do with Xero—its features go far beyond this kind of analysis.
What is your gross margin?
What are your debtor days?
What is your average selling price?
What is your average revenue per customer?
What are the biggest expenses of your business?
What is your customer lifetime value?
What percentage of customers are return customers? What are your manufacturing/production costs – cost of goods sold?
It’s not just the numbers
Of course, there are some elements that interest the shark beyond just the numbers, and it’s important to give these questions considerations as well. Elements like brand appeal, value of the market and your own dedication to your business come up often. But, overwhelmingly, there are two simple questions the sharks always ask:
What customer problem are you solving?
Why are you the one to solve it?
These are questions only you can answer and it is worth taking the time to consider your responses honestly. It’s a simple strategy that could be a game-changer for you.
The value of the expert opinions
Shark Tank serves as a reminder that it’s important to take any opportunity to get expert advice. Sometimes on Shark Tank the sharks don’t invest but they give excellent advice. Make sure to seek out and listen to that advice for your business whenever possible.
The art of the counteroffer
The fascinating element of Shark Tank is the negotiation element, so learn all you can about the art of negotiation if you’re going to be pitching for investment soon. Knowing the value of a well-crafted pitch can be the difference between success and failure.
In conclusion, whether you are actively seeking investment or simply looking for a tactic to give yourself a fresh perspective on your business, you need to ensure the numbers stack up. Using Xero’s many tools to know your numbers better might just help you get a shark to invest in your business!