2 Lessons From Shark Tank & The Profit
Two popular shows for business owners and entrepreneurs are Shark Tank and The Profit on CNBC. The shows can be entertaining at times and you can also learn some things about business from both shows.
As the name implies Shark Tank is definitely a reminder that you are swimming with sharks – that business is always a competition and someone out there is trying to eat your lunch or maybe eat you for lunch.
You can also learn from the mistakes and successes of the various entrepreneurs pitching their businesses to the sharks, hoping to secure an investment and connections to make their dreams come true.
For me however, the biggest takeaway from Shark Tank is that if you want to have a business that will survive and be able to grow and make lots of money, then you better know your numbers inside and out.
One of the most important numbers is customer acquisition cost. They often say “if you cannot pay money to acquire a new customer then you do not have a real business”.
If you don’t know how much it costs you to acquire a customer when you go on Shark Tank, get ready to hear that infamous catchphrase, “and for that reason, I’m out.”
So know your key numbers like market size, annual revenue, profit margins, cost of goods sold, and especially customer acquisition cost.
Right after Shark Tank on Tuesday nights is the newcomer to CNBC with 2 seasons in the books, The Profit.
The Profit is Marcus Lemonis, a self-made billionaire who specializes in performing turnarounds on the show. He chooses businesses which he thinks have potential but are typically in the midst of some type of crisis.
Marcus invests his own money in the companies and helps them overcome the impediments to progress, and often helps them achieve breakthrough growth and success (and sometimes not so much).
The takeaway lesson for me from The Profit is how Marcus evaluates a business when he does a turnaround. His process appears to be a 7 point matrix using the four key components of SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), cross-referenced against what Marcus calls the “Three P’s. People. Process and Product”.
Using this matrix, he can quickly determine the impediments and drivers of success and which “P” he needs to focus on fixing for the company to reach it’s potential. For the companies on the show there is always a problem with at least one of these areas. If there is a problem with 2 or even three then Marcus probably wouldn’t make a deal.
Awareness of the “Three P’s” makes it easier to evaluate and solve problems in business. This is also a great starting point to evaluate a business or a problem systematically starting with limited time and information.
As business owners we should take any lessons we possibly can from self made billionaires like Mark Cuban and Marcus Lemonis. Those are two that stand out for me from Shark Tank and The Profit.
