Use these Shark Tank questions to grow your business even if you aren’t looking for investors
Shark Tank combines reality show drama with one of my favorite topics, venture capital investing. It’s been a hit since launching in 2009 but is much more than just good entertainment.
I spent years as a venture capital analyst, researching companies and investments for big-money investors. I ran a team of six analysts for a Canadian VC firm in 2014 and love the high-risk, high-return nature of early-stage investing.
For anyone in a cave the last nine years, Shark Tank features five billionaire investors that have created their own companies. Sharks include Kevin O’Leary, Barbara Corcoran, Daymond John, Robert Herjavec, Mark Cuban and Lori Greiner. The panel hears a pitch by an entrepreneur looking for business funding and then each person decides if they want to invest in the company.
The VC concept is as old as business itself but the Shark Tank show is actually a spin-off of a Japanese show called Tigers of Money and a later British version called Dragon’s Den.
While there’s plenty of scripted drama on Shark Tank, the show can be invaluable for real business owners. The questions asked on Shark Tank are questions I asked on a daily basis of the potential investments the firm was considering in early-stage small businesses.
Even if you’re not looking for business funding, these Shark Tank questions will help you guide your business, stay competitive and grow beyond your wildest dreams.
23 Shark Tank Questions for Starting a Business
Getting your idea off the ground is probably the hardest part of small business. There’s a lot more planning that goes into a successful business than most people understand.
Sure, you can jump right into selling your custom horse-buggy whips, but a little planning could tell you that the market dropped out with the launch of the Model-T. Asking these 23 business questions will help you understand the market and your product to be successful from day one.
There’s another benefit to asking these Shark Tank questions before starting your business idea. Self-defeating voices and doubts are the biggest destroyers of small business dreams. You never quite lose the voices completely, but a little planning can go a long way to giving you the confidence that you’re ready.
Why did you pick that product name?
There’s nothing to say you can’t change your product name later but you’ll lose a lot of brand recognition. Spend some time creating a name that is brandable, memorable and easy to remember.
Are you a product or a service company?
Or both? A lot of product companies see the largest part of their revenue from continuing service or some add-on to their main product. Understand exactly what it is you provide to the customer and other needs you can fulfill.
Click to reserve your spot at the FREE YouTube Quick-start Webinar! I'm sharing three strategies that helped me grow my YouTube channel and double my business income, and I guarantee they WILL work for you. Seats are limited for the webinar, so make sure you reserve yours.
How does your product work?
I’ve seen entrepreneurs try to buy a product or company and have no idea how it worked. Having that expert knowledge will go a long way in creating marketing material and establishing relationships. Explaining how the product works to yourself and others will also help reveal flaws in the process.
What makes your product unique?
You need an outside opinion on this one. Is your product really something different? You can go to market as the ‘low-cost’ producer but that’s rarely a profitable idea. To be successful, you need something special.
What else comes with your product?
Two ways to think about this, are there things you can provide with your product as sales incentives or are there things you can offer as up-sales? Both are powerful features that will make you more money.
Why are you different than your competition?
Again, go for the differentiation angle rather than low-cost. You don’t want to be competing on price with established companies that can win a price war.
Why are you better?
Do you offer a better service, a longer life product? What are the customer’s needs that are satisfied and how does your product do this better?
Can anybody else do what you do?
This is one of the Shark Tank questions that nobody sees coming. It’s easy to think your idea is unique and impossible to imitate but how realistic is that? A truly successful business is built around a service or product only you can provide.
Is there a lot of competition?
Don’t mistake lack of competition as a business opportunity. There aren’t many buggy whip producers but that doesn’t mean it’s a slam-dunk business idea. You want a market with lots of competition and sales but one that isn’t providing the service or product to meet customers’ needs.
Who is your target audience?
Don’t try to satisfy the entire market. You might grow your business to satisfy multiple niche within the market but start by targeting one group with very specific needs. Brand yourself as the very best for that group and expand from there.
What makes you think consumers want this product?
Nothing beats good market research. What are the existing competitors? What customer needs do they fulfill and what isn’t being fulfilled?
How big is your team?
If you’re not outsourcing some part of your business, you’re not being as successful as you could. Learn what you are really good at and find people with skills that can help your business grow.
How do you plan on advertising your product?
Let’s rephrase that Shark Tank question to, “How do you plan on advertising your product and do you know the return on that advertising?” It’s not enough to throw money at your business. You have to know how well different advertising channels convert to sales.
Where do you plan to sell your product?
Are you selling online or at the store? If you’re selling in a store, is it as close to the checkout decision as possible? If you sell online, are you on the sites where your customer is thinking about the need you satisfy?
Are you working on your business idea full time?
Venture investors and other Sharks want to see full-time commitment before they invest in a company. Taking this leap can be scary but it can also force you to take your business seriously.
What is your background?
If you don’t have experience in the product or in your business’ industry, don’t even think about it. Don’t think you can be a successful business person just because you have management skills. You need direct experience in a specific industry.
Why did you get into this business?
It better be more than just you wanted to make a lot of money. Building a business is a lot of work and you need to enjoy the industry in which you operate. That will give you some motivation to keep going before the money starts rolling in.
How did you come up with your idea?
The best business ideas come from noticing an unfulfilled need in the market.
Who designed your product?
Do you know enough about the product to design it yourself? Did it take a technical expert or can just anybody imagine it easily?
How do you make your living now?
Do you have sales coming in or do you still depend on an outside income? Angel investors are looking for that commitment, that you are 100% behind your idea because you rely on it for your livelihood.
Are there any samples you can show us?
Part of being an impassioned business owner is always looking to show your product to someone new or to tell them about it.
Why should I care about your product?
If you can’t explain to people why they should be excited about your product (and actually get them excited) then no amount of marketing will help you.
Click to reserve your spot at the FREE YouTube Quick-start Webinar! I'm sharing three strategies that helped me grow my YouTube channel and double my business income, and I guarantee they WILL work for you. Seats are limited for the webinar, so make sure you reserve yours.
22 Shark Tank Questions to Analyze Your Sales History
A lot of these Shark Tank questions about sales can also be answered before getting started, as a way to plan for your business. If you don’t know how high sales are for competitors’ products or your potential sales, how will you ever know if you’re doing well?
These sales history questions need to be an annual review as well. We’ll talk about improvement and growth in another section of questions but planning an annual review is extremely important. It’s easy to get lost in the day-to-day struggle of small business and miss the big trends in your business.
Step back every once-in-a-while and ask yourself these broad-level sales questions to keep an eye on the big picture.
How long have you been in business?
This includes business planning and operations.
Who is your consumer so far?
Are your current customers a niche part of a larger market? How are they different? What are the similarities they share with other customers in the market?
Who is your biggest customer?
Relying on one customer for a big portion of your total sales isn’t a good thing. What happens when that customer stops buying or decides they want to negotiate a lower price?
Understand who this customer is, why they buy and where you can find others like them.
What were your sales last year?
What will your sales be this year?
These last two should come from a spreadsheet that track your sales and all operating expenses. You don’t have to be an accountant, but you better understand where your money is going and how much a profit you make on your business.
Where do you produce your product?
A follow-up to this business question is usually, “Are you limited to how much you can produce there? Is there somewhere you could produce at greater scale or more cheaply?”
What are your logistics?
One way to lower your costs is by producing closer to your suppliers or buyers. This cuts down on transportation costs and can even build your brand as being locally-sourced.
What is your lead time?
This question is a big one but usually ignored by many business owners. How long does it take to put in an order for supplies, produce your product and deliver it to the customer? Understanding this will help you save money and make sure you don’t run out when your customers are buying.
How much does it cost to make?
This includes raw materials and production costs. Don’t forget to include a cost for your equipment used in production. That equipment is going to wear out regularly and you’ll need to buy new so depreciate an amount every year to estimate your cost per unit.
If you don’t know exactly how much it costs to run your business, you’ll never be as profitable as you could.
How much does the package cost?
How much does it cost to ship?
How much do you sell it for?
The answer to this question should be based on competitors’ prices, your product’s unique selling point, your own costs and how much you need in profit.
How do you sell your product?
Does the product sell retail off the rack or do you need a more intense marketing funnel? This isn’t just the physical location at which you sell but the process you use to sell.
Do you sell your product online?
Even if you’ve had success selling from a physical location, don’t overlook the need to find online distribution. Likewise, a strong online sales channel doesn’t mean you can’t also be successful selling offline.
What is your marketing spend?
Again, more than how much you are spending marketing is the question of where you are getting the best bang for your buck.
How many subscribers are there?
Can you convert your product into a subscription model or can you offer an add-on service that brings people back every month? Keeping your current customers close through some kind of a continuous relationship can help keep them from thinking about a competitor’s product.
How many purchases do customer’s usually make?
Is your product a one-time sale or do customers need to buy it regularly? What’s the average lifetime spend for a customer and how often do they need to come back?
What is your attrition rate?
Attrition rate is the number of customers you typically lose each year out of your whole customer base. If you have around 100 customers and typically lose five a year then you have a 5% attrition rate. Why do customers leave and is there something you can learn from past clients?
What is the lifetime value of your product or service?
What is your product worth to customers? Does it help them do something or does it satisfy a need?
Have you done any corporate sales?
This business question can extend beyond corporate sales to the wholesale approach to large retailers or any group of your customers.
What was the reception for your corporate and retail sales?
It can be frustrating to even get your foot in the door to pitch large distributors but it will teach you a lot about your business. Try networking where decision makers are within your community to get past the gatekeepers to these deals.
Where does your product sit on the shelf?
Optimally, you want your product at eye-level and as close to the buyer’s decision as possible. You also want to consider what other products are around yours.
13 Shark Tank Questions for Valuation
Shark Tank candidates are looking for an investment in their business. They need funding for growth and need to convince a venture capital investor or angel investor to lend their insight and hard-earned dollars.
Even if you’re not looking for money to grow your business, these business valuation questions should be asked regularly. It’s one way to measure your business’ growth and you may need to answer them someday to bring on a partner or sell your business.
Why do you value your company the way you do?
I always used three valuation approaches when valuing a company for venture capital investors like the Sharks. Understanding the different ways to value a company can help understand how to grow your company as well.
- Comparables finds a measure like price-to-earnings or enterprise value-to-sales by which competitors are valued and then applying that to your own measures.
- M&A method looks at how much other companies are paying when they buy a company similar to yours.
- Proforma cash flow uses estimated sales and profits to find a current value.
Are you including projected sales in your company valuation?
Projected sales and other proforma numbers must be realistic. Creating a proforma income statement is a must for any business owner and goes way beyond just trying to value your company. Set your sales goals and plan your expenses to find potential profit.
Do you own a patent?
A patent can be a huge plus but it’s not guaranteed protection against competitors. The fact that your product is patentable might be a selling point.
What is proprietary about your product or service?
This goes back to your business’ uniqueness and how easy it will be for a competitor to copy. It doesn’t have to be simply about the product but can also be how you deliver it.
Is there proof of concept?
If you’re still in that startup stage of business, you’ll need to produce a test product for proof of concept. You’ll use this to test that it actually works and other points like durability.
Is there a partner or partners currently involved?
This question is a little more geared to the venture capital and investor route. Sharks want to know who they will be working with if they come in on a business.
How much do you do in crowdfunding?
Crowdfunding is about much more than just the money. Launching a crowd campaign can get you instant feedback before you spend a dime in production. It can also build a community of cheerleaders around your brand.
How much debt do you have?
Don’t think debt is a bad thing for your business. It might be a better source of funding than sharing your profits with an investor.
How much inventory do you have?
Do you have enough inventory to handle big spikes in sales or might you run out of product? Are you paying to store your inventory or is there a way to track your sales so you have just enough produced to meet sales?
How much of your own money is in the product?
Angel investors and Sharks like to see ‘skin in the game’ from entrepreneurs. Don’t go looking for outside money unless you’ve already put your own money behind it.
What is your market share in comparison to your competitors?
Understand how much in sales is made on your product and competitors, both in your local market and globally. This will help you track how you compete and growth potential for the future.
Where do you get this data from?
Is there an industry resource from which you can get market data? Are there customer surveys you can get?
How soon will the investor receive a return on their investment?
This might not be as important a question if you’re not seeking outside investment but normally VCs like to see an exit plan on their money within three to five years.
8 Shark Tank Questions to Ask Before Accepting an Offer
Just like the last section of Shark Tank questions, don’t underestimate the value of these 12 questions to help you value an investment offer.
You may not be considering a business partner or angel investor but they can provide a wealth of knowledge beyond money. Besides money for growth, a business investor brings word-of-mouth and a lot of skills to the table.
In fact, most Shark Tank entrepreneurs aren’t really in it for the investment funding. The Sharks bring decades of business experience and connections to a business.
Before you bring on an advisor or business partner, you need to understand what you need out of the relationship and how much it’s worth.
Why do you want this investment?
Hint, the right answer here is not because you need the money. Money isn’t an end for a business but a means for growth and development. How can you use extra resources to grow your company?
Why give away part of your company right now?
Why not wait until the company has grown more to sell a share for more money? Why is right now the best time for this growth?
Do you want a partner or the cash?
Again, cash isn’t the right answer. This isn’t just when seeking an angel investor. Whenever you bring someone in to your business, ask yourself what they are contributing. What is there value beyond just their money or their time.?
Can this product be licensed?
Licensing your product or franchising the service can be a great way to grow sales while limiting your own risk.
Will you accept a royalty instead of giving away equity?
Royalty investments means investors are paid out of future sales. Since a new business is much more likely to have sales than profits, it’s a less risky form of investment. For owners, it can be a good source of cash and investor skills without giving up an ownership share of profits.
Royalties usually only extend for a specific period or until investment dollars plus profit have been returned.
How will you use the money to grow your business?
A great question for any business owner is how would you grow your business if money was not an issue? What would you do if you had unlimited resources to grow? Conversely, what would you do if you had no money with which to invest?
Has anybody else offered you money?
They may ask this on Shark Tank but it’s not something you would answer directly in a venture capital deal. You might answer vaguely like, “I have been approached by a major [sector] company,” and provide some broad-outline of the deal but you wouldn’t want to give away all your information.
How much money do you have and what is your cash burn rate?
Investors want to make sure you aren’t running out of money before sales are enough to cover your expenses. This can be a great planning question as well. Cash burn is the amount of money you spend each month that isn’t covered by sales, how much of your cash are you burning through before you run out?
16 Shark Tank Questions to Improve Your Product (If You Don’t Receive an Offer)
I shared my opinion on business failure in last week’s 51 business quotes. The truth is, I don’t think there’s such a thing as failure. That’s not some lame, motivational idea but a belief that running a business is a succession of projects, goals and progress.
You never really fail until you die (because that’s it. Game over).
Not meeting a goal or not making progress isn’t a business failure because it’s not the end. You make a new goal and keep measuring your progress. The failure to reach that prior goal is an insignificant period compared to the entirety of your business.
There will be times where you’ll receive a flat-out rejection from an investor or customer. That can feel like failure but can also be turned around as a lesson. Use the rejection to learn how you can improve your business. You might just find that you grow faster off the rejection than you could have grown with the new partner or customer.
Can you improve sales by hiring outside help?
You might not be able to hire a full-time working but you should always be on the lookout for ways to outsource smaller tasks, especially for tasks which you aren’t good at doing. Do what you do best and hire other people with the skills to make your business a success.
Is it easy to improve your product?
If it’s easy to improve on your product, a competitor is going to do just that. Your unique selling position shouldn’t be something that can be easily or quickly improved on.
Are you targeting the right customer?
For many new businesses, the right customer is the one that’s buying. As your business evolves, the right customer is the one that is willing to pay the most for your product. Who’s needs does your product serve best?
Are you offering the right products?
Success in business is about constantly evolving your product or service. Does it still serve your customer’s needs and is there a faster, better way to serve?
Are you marketing your products in the best possible way?
The answer to this Shark Tank question has to come from testing. Try out different marketing channels and keep a close eye on costs, sales and the types of customers you’re attracting.
What makes you think consumers want your product?
This is an interesting question. Just because people buy your product, doesn’t mean they ‘want’ it. They may be buying it out of novelty, curiosity or grudgingly think they ‘need’ it. Work on building your brand so people ‘want’ to buy your product.
How much does your product cost compared to your competitor?
Don’t be afraid to charge a premium price for a premium product. I would rather spend a little more marketing to develop my brand and be able to get more for each sale than compete on price.
Can you scale your product without an investment by making a few changes?
Regularly review the entire process behind your product to see where improvements can be made.
What is the main reasons customers don’t make an initial purchase?
Feedback from non-customers can be hard to come by but it’s a goldmine of information. Put together a group of people to offer feedback on your product and why they wouldn’t buy.
Is there a learning curve for your product?
Do your customers need to learn how to use the product? This can be a hurdle to get that first sale but you’ve got a greater commitment from buyers. Spend some time and money to help teach people how to use it. Then they’ll be ‘locked’ into it for the time they spent.
Is it easy for customers to understand your product?
Technical or perceived technical issued can be difficult to overcome. Product demonstrations and testimonials can be a great tool here.
How will you update this product?
You need to have product improvements on your calendar but also need to be watching competitors for their updates to make sure they don’t jump ahead.
What is your biggest obstacle to scaling your business?
Is it time, money, labor or something else?
Is your product too localized to be franchised?
Even if you start selling to a small, localized niche of customers you want to ultimately expand to other markets. Franchising or licensing can be a great way to do this.
Are you the best person to be selling your product?
Some people just aren’t good at sales. You should be passionate about your product and business but that doesn’t mean you have to be the one to sell it every day.
19 Shark Tank Questions to Scale Your Business
Scale is something you hear a lot of Shark Tank. It means growing your business and your sales to a massive point where you benefit from buying supplies in bulk and reaching maximum efficiency in your operations.
Reaching this level of size is important for venture capital investors like the sharks. They aren’t interested in partnering with a business unless they think it can reach hundreds of millions in sales. If you’re a billionaire, making an extra million isn’t worth your time.
Scale is important for any entrepreneur though because until you reach that optimal business size, you’re not reaching your full profit potential. Until you are operating efficiently, you’re always leaving money on the table.
The idea of constantly seeking growth is important as well because a business that isn’t growing is dying.
You can bet your competitors are evolving, adapting and growing. If you’re just standing still, then you’re actually getting pushed backward and may one day find you’re out of business.
Ask yourself these Shark Tank questions for business growth to make sure you’re moving in the right direction.
How scalable is your product or service?
Even if you’re happy with how much your business is making, you always need to think about growth. Can you reach a larger group of customers more efficiently than you are now? Just going through the exercise of thinking about growing your business can uncover missed opportunities for more sales or lower expenses.
Can your product be mass produced without compromising quality?
Don’t write off quantity as a way to grow your business. Henry Ford was able to mass produce his cars at such a pace, he could offer them at a lower price and still make more money than all other car companies combined.
Is your product where you want it to be right now?
Your product doesn’t have to be perfect to take it to market. In fact, don’t wait until everything is perfect to start making sales. You should however always know how you can improve your product and what’s the next step in its evolution.
Can this same product be sold indefinitely or must it be updated as technology advances?
Keep an eye on your competitors’ products and the products used in conjunction with yours. If a complimentary product changes, you may need to change your product so customers can still use it.
Can you estimate how big your market is?
Change this question to, “Estimate how big your market is.” If you can’t estimate the market size then you can’t know if it’s a good business idea.
What feedback have your received from current customers? Can this feedback be used to develop new products or services?
Not only will seeking customer feedback help to improve your product but it will also build that relationship to keep a customer.
When scaled, what will you sell your product for?
Can reaching a larger market help to lower the price for your product and make it more competitive?
How big do you think you can be in 2-3 years?
You should always have a short-term (three years) and a longer five- or ten-year plan for your business.
How are you going to turn this into a brand?
Without a brand, you’re competing on price and that’s a quick way to lose money. Make your product stand for something in customers’ eyes so they’ll buy it even at a premium price.
Where is the next place to sell your product?
This can be within the same locale but to another group of customers or to your existing customer type but within a different region.
Do you already have future products or services in the pipeline?
The answer to this should always be YES!
Can other items be included with your product?
Again, consider pre-purchase incentive products and add-ons.
- Pre-purchase incentive products are freebies that come with your product to persuade the consumer to buy.
- Add-ons are offered after the purchase for a discounted price to add to your profit.
Which shark will be the most beneficial to scaling your product and why?
If you’re looking for an investor or partner, think about more than just their money. It’s their skills, experience and connections that you’re really after. Which ‘shark’ can take your business farther?
How can investors help you enter a new market?
The best investor will have the connections to introduce you to a new market or a new group of target customers.
What you are current production costs and commercial rent? Can either expense be reduced?
Regularly review your entire sales process to see if there are expenses that can be reduced without sacrificing quality.
Can you produce your product overseas to increase profit margins?
Check out Alibaba for low-cost manufacturers that can ship cheaply to overseas retailers.
Can you sell your product overseas?
This is the ultimate step in growth but can include a lot of risks as well.
The list of Shark Tank questions may seem insurmountable, but wouldn’t it be easy to answer them now than wonder why your business isn’t growing as fast as it could? Take just a couple of weeks to answer every business startup question and you’ll be ready for anything. You’ll have the confidence to start your business because you’ll know you’re ready for prime time.