You are looking for startup capital and have decided to pitch for financing in the ‘shark tank.’ kudos for the great idea!
One thing you need to know before you face the shark tank judges is that some questions are almost certain to come your way, and preparing for such can increase your chances of closing a deal with a shark.
Questions the Shark Tank Judges Ask
This guide will take you through the common questions the shark tank judges ask to help you prepare your pitch thoroughly.
How Much Revenue Do You Have?
Revenue is the total amount of money you reap from your business operations over a given period. In most cases, the shark judges will ask about your revenue to calculate the risk of financing your business.
While preparing for this question, it’s important to note that most sharks will be interested in your business if they note a consistent growth in your revenue. So, it can pay to present comprehensive cashflows for the past few years for comparison purposes.
Besides accounting for the sales revenue, you should also present how you drive your sales and how you plan to maintain their consistent growth in the future. This is where strategies like digital marketing come into force. Remember, you want to convince them to believe how safe it is to invest in your business.
How Profitable Is Your Business?
The sales revenue above isn’t enough to convince the shark judges. After all, most judges know that you can be making a lot of sales but not generating a lot of profit.
So, in addition to calculating your total revenue, you’ll also need to calculate your total costs and get the difference or present the income statement for the business. On top of that, you should also account for how you allocate your profit.
The above two questions will help the shark tank judges assess the financial health of your business and decide whether to contract with you or not.
Why Do You Need Our Money?
Most sharks know you want to start a new product line, expand, or grow your existing business. What they want to hear is how you will strategize to achieve your goals while benefiting them.
Suppose you own a manufacturing firm. In that case, you can talk of boosting production by investing in capital inputs, employing a qualified workforce, improving customer reach out, motivating the current workforce, or any other strategy that is likely to win the interest of the investors.
How Do You Handle The Competition?
You need to comment on how you differentiate your products from the competitors to top the competition. Is it through marketing, product design, pricing, or packaging? Just name and elaborate on it.
If you have invented a unique product, ensure you highlight the measures you have taken to exclude competitors from copying, using, or profiting from your invention.
Being able to top the competition and prevent your invention from being copied can increase your chances of beating one of the sharks into your business.
This is more so if the business is making profits and you can project how the business will be more profitable in the future using the current trends.
Do You Have Any Debt?
The shark judges know that most businesses thrive on external financing and fear the risk of helping you repay your debts. Honesty is paramount when it comes to this question. If you are currently repaying a loan, mention how you utilized it and its impact on your business.
It can also pay to mention the borrowing terms for the loan and how loyal you have been to them.
You can also mention previous loans whose repayment is complete and account for their positive impact on the business. The idea is to convince the sharks you can give them their stake despite having other financial obligations.
How Long Have You Been In This Business?
The investor would like to know your level of experience in doing the business in question. While mentioning the duration is essential, mentioning your business experiences over the mentioned period can move the sharks even more.
For instance, you can mention how you came up with and implemented the idea. Also, be sure to mention the business trends that have come your way and how you have been adjusting your business to maintain business leads and sales.
How Do You Acquire Your Customers?
Suppose you want to expand your operations to another location. The sharks might be interested in how you’ll reach out to your customers.
Here, you can talk about product promotions, introductory discounts, asking for referrals, re-contacting old customers, updating your website, and any other strategy that can attract new customers to your new business.
The sharks might also want to know why you think the customers in the new location would like your product. In this case, you should present the panel with answers on how you validated the demand for your product in the interest area.
You can talk of demand validation methods like online surveys, analyzing the search volume, engaging with potential customers, analyzing customer responses, or whatever method you applied to validate the demand for your product.
Also, highlight the results obtained in each method and their implications.
What Is Your Current Inventory?
While it’s good to stock your business, presenting a huge figure for your inventory might signal the sharks that customers aren’t interested in your products. However, that doesn’t mean you lie to the judges.
If you still have a lot of inventory in your business due to recent delivery, then you must present the truth. Also, inform the sharks how much return you expect from the current stock in a given period.
The above are the common questions the shark tank judges ask. The questions may not come out exactly as stated, but you may need the same ideas to answer and increase your chances of winning a shark.
While preparing for the pitching, prepare for other possible questions you speculate the shark tank judges are likely to ask.